By Steve Dinnen
Before you hire a financial adviser, consider the three Ws: whether, when and who.
Whether
Let’s start with whether: Is it even advisable? We all (should) have money to manage, be it personal savings, inheritance, 401(k) workplace accounts or a similar investment. Maybe it’s a pension that’s building value — they still exist — or individual investments in the stock market. Then we have outflow, like mortgages, tuition, a new business investment, a surprise weekend in Paris. It can get complicated tending to all these dollars flying in and out from different directions, and not everyone has the time or inclination to do it on their own.
Travis Rychnovsky, chief growth officer at Foster Group, said the company was approached a few years back by a couple with assets in the $10 million range. The husband was quite an astute investor. The wife wanted a financial adviser to step in because, if her husband died before she did, she had absolutely no interest in managing their money.
When
Not to get too dark, but the inevitable arrival of death presents an opportunity to consider bringing in a wealth adviser.
“A lot of times there is a triggering event, like the kids going off to college, or retirement planning,” said Eric Williams at AO Wealth Advisors. A job change might prompt a conversation about wealth advisory service, especially if that new job comes with new benefits.
There’s no age limit, young or old, to hire a financial adviser. But most agree it’s better to think about it sooner than later.
“We tend to focus on the 30s and 40s, when people are hitting their stride in their career,” Williams said. Their chances to build wealth are greater when their money-management plan has a far-off horizon.
That horizon will stretch from your work years into retirement, from paying for college and a home to buying a vacation home, or selling your business or law or medical practice. You’ll shift from accumulating assets to managing them, so you may want some expert guidance.
Who
Anyone can call themselves a financial planner. At a minimum, though, look for someone who has earned the certified financial planner (CFP) designation, which shows they’ve spent time developing skills to serve you. Additional designations include chartered financial analyst (CFA) or registered investment adviser (RIA). These advisers will take charge of your money, typically by placing it into mutual funds or ETFs. They will have done so after interviewing you about your goals and needs. They’ll also help keep you accountable or manage risk, which may not be your strong suit.
They’ll charge you for this. Some charge a flat fee, while others charge a fee that’s a percentage of the assets they’re managing.
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