I admit it. I’m one of those people who likes to figure things out for myself. Over the last few (or maybe more than a few) years, I’ve worked hard to figure out where figuring things out for myself leads to positive self-esteem and where it just leads to stubbornness and frustration. We can’t do everything ourselves (thank heavens for girlfriends) and we can’t be experts in everything.
Girlfriend Guru and financial expert MIATA EDOGA shares some great tips for how to choose help when it comes to personal finances. We want to hear about your experiences, girlfriend–tell us in the comment section (we really are listening).
While I believe strongly that nobody cares about your money as much as you do, I also live in the real world. Money management can be a full time job, and hopefully, you’re successful enough that you’ve already got your hands full with other tasks. If you think it’s time to hire help, make sure the adviser you hire shares your values and goals. In a nutshell, here’s what you’re looking for: an adviser who wins as you win and who won’t shy away from telling you when you’re really stepping in it with your financial management practices.
Who you are has as much to do with finding a good adviser as anything else. Don’t necessarily choose an adviser who’s “like you.” Choose one who compliments you. I often choose coaches who I know think about life differently than I do. Why? I don’t want to pay someone to tell me what I already know! At the same time, I need someone who’s going to be clearly on my team while they disagree. I have to be willing to hear the criticisms they have, not tune them out.
Two popular designations for financial advisers are Certified Financial Planner and Chartered Financial Consultant. While these don’t ensure that your adviser is an honest, competent person who’s going to work in your corner, it does show that the adviser has passed rigorous competency and ethics tests.
You can often find out about an adviser’s intentions based on licenses. Advisers who are only licensed to sell insurances will probably be targeting you to buy some. On the flip side, advisers who are licensed to broker securities like stocks and bonds but don’t hold insurance licenses may overlook the important area of risk management.
Find Out How She’s Paid
Advisers are often paid in one of three ways. While one form of payment doesn’t make an adviser good or bad, it will show you explicitly how the relationship will work.
Commission-based advisers receive compensation when you purchase something from the stable of products they recommend. The good news: you’ll have an adviser who’ll work hard to make sure you implement your plan (because that’s when they’re paid). The bad news: if the adviser’s products don’t match your goals, you could end up with the wrong investments.
Fee-based advisers receive compensation based on fees they charge to complete financial plans and to manage assets (usually they charge a percentage of the amount they manage in lieu of a commission). While these advisers are still motivated to help you implement your plan and the investments are likely to fit your situation, their fees may be considerably higher over time than those of a one-time commission adviser, due to their recurring nature.
Fee-only advisers charge you for the time and energy to complete a plan on your behalf. They aren’t compensated in other ways. Studies have shown that these advisers usually produce the most comprehensive plans that match your situation best. However, studies have also shown that because these advisers have no incentive to help you implement the plan, people are more likely to use the adviser’s strategies like a buffet and only implement the parts they choose. In most cases, this is harmful to the overall strategy.
A wonderful adviser can help you in ways you might never expect. She can point out flaws in your plan, round out your thinking about critical income and expense issues, and help you diversify your balance sheet while protecting your downside and applying optimal tax treatment. Take the time to interview several people to make sure you pick the person who’ll be the best fit for you!
MIATA EDOGA is the President and Founder of Abundance Bound, a 10-year old company committed to utilizing humor, inspiration & lots of love to give individuals around the world the necessary tools to thrive financially, while keeping focus on the things they treasure most. Visit the Abundance Bound Facebook Page for your free copy of Financial Success for the Creative Soul!
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