Choosing a financial service: what to look for

Choosing the right financial advisor is an important decision. In fact, it’s almost like hiring a financial officer for your family! The financial advisor or services company that you choose will be in a position to have a major effect on your financial future, so you can’t afford to choose unwisely.

Doing your research to find the right financial services company is a good investment of your time, and is as important as getting to grips with all of the various pieces of financial jargon associated with investing and saving. To help you make the right choice, here is a short guide to what you need to look for when finding your financial services firm. Jargon refers to special terms that only people in a sector or niche use (with a specific meaning).

Know your financial advisers

Some companies that offer financial advice only provide financial planning services without investment management, while others are focused on managing your investments, but offer little in the way of planning or savings advice.

To make the right choice, you need to know what is best for you and your family. There are, broadly, three types of financial advice available. Financial planning takes an overall look at your financial life and helps you find the best savings and insurance. An investment advisory service will be aiming to help maximize the return on your investments. There are also retirement income planning services, which combine all your potential sources of revenue to maximize your post-retirement income.

Check out credentials

It goes without saying that you should always check the credentials of any financial company that you choose to work with, but it is important to look carefully. Some organizations offer credentials in return for a fee, and therefore are largely worthless. You need to look for financial advisors who can show that they have their College for Professional Training (CFP), Personal Financial Specialist (PFS) or Chartered Financial Analyst (CFA) credentials. These cannot be obtained without passing an exam, and without committing to strict ethical standards and ongoing training. Even more impressive credentials are obtained through the National Association of Personal Financial Advisors, which is a group that requires its members to undergo continuous training.

How do they get paid?

It is also important before hiring a financial services company to be clear how they are going to be paid. There are several ways that a financial advisor can be compensated, including asset-based fees, hourly fees, commissions or hourly rates. Generally, the best advisors to go for are those that offer a fee-only service. This means that they are only representing you. A non-fee-only financial services company may be compensated in other ways, such as meeting sales goals, which means that they are not necessarily fully focused on your financial wellbeing.

There are occasions when opting for an advisor paid through commission may be the best option, particularly in the case of long-term investments. However, if you are likely to be seeking regular financial advice, then a commission-based compensation arrangement will not be in your interest.

Head online to narrow the search

The internet is a powerful tool for financial services consumers and can help you to narrow down the field of choices, by focusing on those that have the right credentials and the billing structure to suit your needs. Location can also be a factor if you want to talk with your advisor face to face, though most financial services firms are largely set up to work with clients through remote contact or offer interactions with customers through Skype or FaceTime.

Ask the right questions

Before you make a commitment to hire a financial services company, make sure that you ask all of the questions that you need to be sure that you are dealing with advisors who will make a positive contribution to your financial wellbeing. Make sure that you ask for references, and that you understand every aspect of how they work, from fee structure to communication methods. It is important to ask questions, but just as important to ask follow-up questions if there are things that you don’t understand. Remember, it is your money, so you are entitled to ask as many questions as you like.

A good financial services company can help you to boost your future income, manage your investments, and maximize the effectiveness of your savings. However, it is important to weigh up all your options and be sure that you are happy before hiring a financial company, so as with any other aspect of your financial life, make sure that you do your research before you take the plunge.