Want to improve your finances this year? One of the best things you can do is to get a trusted financial professional on your side.
Finding good financial help will go a long way toward helping you reach whatever goals you establish – such as planning for retirement, starting a business or paying for a college education.
Financial help can range from an accountant who shows you how to minimize taxes to an investment expert who guides you through the intricacies of investing in stocks or bonds. Selecting an investment professional will require some effort, but nothing extraordinary. You just have to be willing to ask good questions, trust your instincts, and do a bit of homework.
Get Referrals from Those You Trust
Begin by asking relatives and friends for the names of professional advisers they’ve worked with and would feel comfortable recommending. Your goal is to find someone experienced who can help you reach the next level financially. It should be a person whose client base is somewhat similar to you.
For example, if you’re making a modest salary and have a job in corporate America, you don’t want to hire someone whose clients are primarily millionaire entrepreneurs.
Do In-Person Interviews
Take the time to interview at least three individuals in person. Inquire about each person’s career experience, educational background, and investment philosophy. Don’t be afraid to bring up the issue of compensation either. A trustworthy adviser will answer your questions honestly without side-stepping the issue.
You need to know whether he or she will be paid a commission, a flat fee, or an hourly rate. Also, ask whether an adviser can provide you with a list of satisfied clients you can contact. You can find a fee-only financial planner at http://NAPFA.org, the National Association of Personal Financial Advisors.
Conduct a Background Check
Your final step in the selection process is to check out each individual through federal authorities and state regulators. A good place to start is with the Financial Industry Regulatory Authority, also known as FINRA.
FINRA has a database called the Central Registration Depository, or CRD. It contains information about all licensed brokers, such as where they’ve worked for the past 10 years, whether the person’s license or registration is up-to-date, and whether the individual has been subjected to regulatory sanctions for financial misdeeds.
You can reach FINRA at 800-289-9999 or at http://www.finra.org.
FINRA’s records, however, don’t always report everything pertinent about stockbrokers. So be sure to also contact your state securities regulator – via the North American Securities Administrators Association, or NASAA – for any information they may have at http://nasaa.org.
For instance, advisers are required to fill out a document called Form ADV. It contains two parts, including information about a broker’s services, fees and strategies. Ask any adviser you interview for Part 1 and Part 2 of his or her ADV form.
And if you’re worried that “checking up” on a broker might offend the person, put your worries to rest. You are legally entitled to this information. Plus, brokers and advisers aren’t told that someone has requested a CRD report about them when you get info through FINRA or when you look up an adviser in the SEC Investment Adviser Public Disclosure Database, http://adviserinfo.sec.gov.
Remember: having good financial help could mean the difference between reaching your financial goals or falling short of those objectives. So don’t wait or procrastinate to take this crucial step.
Your financial future may depend on it.
Lynnette Khalfani-Cox is a personal finance expert and co-founder of the free financial advice site, Askthemoneycoach.com. Follow Lynnette on Twitter @themoneycoach and on Google Plus.