Many people don’t feel they need to engage in financial planning because they make more money than they spend, are always able to pay their bills, and have enough in the bank to cover basic household expenses. Their lives are comfortable, and they feel that nothing can go wrong.

However, life is unpredictable, so when the inevitable economic downturn occurs, they may soon find themselves strapped for cash.

In such cases, having a detailed and well-thought-out financial plan can provide help and a sense of security in a time of need. A financial plan also offers you a practical strategy for making sound economic decisions in all areas of your life. 

Creating and adhering to a well-designed financial strategy gives you the best possible chance for success in achieving your life’s goals and ensuring the long-term wellbeing of yourself and your family. A financial plan can be of great assistance when preparing for the following major life changes.

  • Purchasing a car for yourself or a family member
  • Returning to school to further your education
  • Buying a home for you and your loved ones
  • Getting married
  • Having and raising children
  • Retiring in comfort and style

Do You Need a Personal Financial Advisor?

The very first question you should ask is a question for yourself. Significant reasons for which people seek the help of a personal financial advisor include the following.

  • They feel “lost” or confused in trying to plan their own financial future and need a guide to help them find their way
  • They lack the motivation to deal with the hassle of financial planning, so they want a professional to handle it
  • They like managing their own money but realize that the financial plan they’ve developed could be enhanced by input from a neutral and objective third party.

If you feel that any of these reasons apply to you, then it would be wise for you to consult with a personal financial advisor.

4 Questions to Ask a Potential Financial Advisor

Before decided to work with any personal financial advisor, you should ask them the following four questions.

Are You a Fiduciary Financial Advisor?

This question is important to ask because a fiduciary is a person who always works with the best interests of his or her clients in mind. In contrast, non-fiduciary financial advisors need to only recommend investments and other financial options based on their “suitability” for the client, even if these actions are not the most ideal choices for the client’s specific situation.

An advisor who is a fiduciary is required to always put your welfare above their own and has an ethical responsibility to recommend investments and other actions that will benefit you in an optimum way, without thinking of the financial compensation or other benefits they might receive.

Are You Primarily a Financial Planner or an Investment Advisor?

Investment management advisors have a narrower focus, namely guidance regarding investments, as opposed to financial planners, who consider all elements of a client’s financial picture, including their investment portfolio, types of insurance coverage, estate planning ideas, and household budget, among others.

If you’re looking for a financial planner, ask potential candidates about their main areas of expertise, and the types of demographic groups they usually serve. If you’re aware of specific areas that you need to focus on, such as learning how going back to school will affect your overall finances, ask if the planner has experience with such situations.

How Will You Be Compensated for Your Services?

Here, the options are whether the advisor works on a fee-only, fee-based, or commission-based system. Being fee-only means being compensated through fees for different services and never through commissions. On the other end of the spectrum, commission-based advisors work exclusively through commissions for advocating certain products.

Operating between these two extremes are fee-based advisors, who mainly charge fees for their services but might also get commissions. To keep the relationship simple and avoid potential conflicts of interest, concentrate on working with a fee-only advisor who won’t receive commissions for selling products.

For their work, fee-only advisors may require a percentage of the assets they handle (most often 1%), a flat fee, or an hourly fee. 

What Are Your Professional Designations or Credentials?

Besides determining how your prospective financial planner will be compensated, it’s also advisable to ask about the designations he or she has obtained. You’ll want to ensure that you’re employing the services of a reputable financial planner who has experience and expertise in most, if not all, aspects of financial management.

Comprehensive financial planning from Wealth Alliance Advisory Group

If you are interested in planning for your future and looking for help attaining financial security, you owe it to yourself to call upon the financial planning services of Wealth Alliance Advisory Group.

Whether you’re looking for investment advice, to achieve financial goals, help with retirement planning, and other aspects of your personal finances, developing a comprehensive financial plan can be a challenge, but Wealth Alliance is here to make the process as smooth as it possibly can be.