You're not a business executive. You don't have a stock portfolio, you've never invested in a vacation home, and you're no stranger to living paycheck to paycheck. And yet for some reason, you've never considered financial advising was meant for a family like yours. If you're part of the 80 percent of Americans who don't have a financial advisor and part of the nearly 90 percent with little to no investment knowledge, it's not all your fault. Historically, financial advisors have mostly served millionaires. According to MSN Money, many of them have refused to even speak to clients with less than $100,000 to invest. But since the recession, everything has changed, and now it's more easily recognized that the average person needs financial help as much or more than the biggest Wall Street traders. But how do you know when a financial advisor is prepared to work for your best interests?Fee-based Versus Commission-based
The National Association of Personal Financial Advisors is a huge advocate of fee-only financial advising, where you know exactly how much money you are paying for an advisor's skills. When you understand upfront what the costs involved really are, it's much easier to find a financial advisor that you can afford and who specializes in working with regular people instead of financial moguls. Many financial advisors still make commission off of products and transactions, and it's almost always guaranteed that you should avoid these kinds of arrangements. Your advisor could push you to buy certain financial management software or even take out certain loans because they make money when you do, regardless of whether it's in your family's best interests.
The Right Services for You
It's important to know what kind of clients the advisor primarily serves and what exactly they can do for you. Some advisors work with a large percentage of recently divorced clients, or newlyweds, or people interested in charity work. If you don't have a large investment portfolio, you need an advisor who does more than just investments - they have to be interested in helping your family with their overall budget and expenses. But you can find advisors willing to help you with taxes, planning for retirement, planning your will, or getting back on track after a lay-off or foreclosure. You also have to decide whether you're okay with meeting once a year or you need quarterly meetings. Once-a-year advisors will often have trained staff who can assist you when they can't.
Do They Care?
Finance professionals may have a fantastic ability to crunch numbers, but if you don't get the impression you're working with someone who listens and cares about your family's circumstances, you shouldn't work with them. According to Ameriprise Financial, most advisors work with clients within a decade of their own age because they can more easily understand the money issues they face. Personalized services are more important than ever when you feel like you're at a disadvantage with your financial knowledge. You want an advisor who won't talk down to you and will never take advantage of you, and this alone can be even more important than their skill set. There are nearly 200,000 financial advisors licensed in the United States, so they should be able to offer a unique client experience.
Most families in America say they could use some help with their finances, especially in today's changing economic climate. If you choose the right help, there is almost no downside to receiving it. The right advisor can impact your future in ways you didn't expect when you picked up the phone.