4 Mistakes to Avoid When Choosing Your Financial Planner

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4 Mistakes to Avoid When Choosing Your Financial Planner

Choosing the right financial planner is one of the most important decisions you’ll ever make. Contact PWG Financial to see what expert financial advice and top-notch customer service looks like!

Selecting the right financial planner is one of the most important choices you’ll ever make. Make the right choice, and you may enjoy increased wealth, financial security, and more. Go with the wrong financial advisor, and you could end up losing a lot of your hard-earned money.

When selecting a financial planner, you need to take your time and consider many different factors. We’re going to outline four common mistakes when selecting a financial advisor, but this list is far from exhaustive. And remember, everyone’s situation is different. So when selecting an advisor, make sure you chose someone who’s good for you and your particular circumstances.

Make Sure Your Advisor is Looking Out for You, Not Selling Products

A registered Investment Advisor Representative (IAR) is a financial advisor with a fiduciary duty to look out for your interests. Whenever he or she provides advice, it should be in good faith and should aim to increase your wealth and financial security. Some unscrupulous planners (often operating under different titles than an IAR to avoid fiduciary duties), however, take a commission for selling certain products (such as a a mutual fund or annuity) to their clients. You want to avoid this at all costs.

Make sure you ask your financial planner about their fiduciary duty and the steps they take to ensure that the client’s best interests always come first.  Financial advisors should charge transparent fees, including a fee only rate, flat rate, or a flat percentage of the assets under management. A transparent pricing structure and lack of conflicts of interest are a good sign.

Talking Only About Investment Opportunities

Financial advisors help people invest their money and selecting investments and building a portfolio is important, but only one of a financial advisors duties. Your wealth and financial well being involves a lot more than choosing stocks and other investment products.

Before a financial advisor even begins offering investment advice, he or she should understand your financial situation and goals. In fact, rather than advising, good financial advisors first start by asking questions. Then, once they have a full understanding of your situation, they can provide tailored advice and insights.

Simply Selecting the Financial Advisor Offering the Lowest Fees

A penny saved is a penny earned, but when it comes to selecting a financial advisor, you don’t always get what you pay for. A particular financial advisor might offer to drop their management fees for the first year or charge a much lower hourly bill rate than competitors. This may sway your choice or at least offer considerable temptation.

When selecting a financial advisor, however, you need to put experience, knowledge, skills, and customer service first. Your financial advisor will have a big impact on your wealth management strategy and financial health. Saving a bit in management fees could cost you a lot of money in the long run if the financial advisor is incompetent or doesn’t devote enough time to managing your wealth.

A low-cost financial advisor may be skilled and a great choice. However, don’t make your selection on price alone.  The underlying investments chosen by this advisor may carry high expenses, and a set it and forget it mutual fund mix may cost you much more, although the advisor may charge lower fees.

The total of all fees of the portfolio must be considered.  We recently took over a large client, and were able to reduce the management fees as well as underlying expenses by over 1%, resulting in tremendous savings to the client.  Fees, expenses, and annual charges should all be compiled and compared in order to do a fair comparison.

Picking a Financial Advisor Solely Because They’re Attached to a Big Name

It’s tempting to select financial advisors working for the most well-known and respected financial advisory companies. In some cases, doing so is a great choice. However, don’t select someone solely because they’re attached to a reputable company. Bad financial advisors can get jobs at great companies and end up offering poor advice, just as great advisors can work in less well-known firms.

Also, keep in mind that the biggest companies are often inundated with clients. Your financial advisor may be managing too many accounts and may not dedicate the time and attention you deserve. So no matter the brand, make sure your financial advisor is providing you with excellent service and the appropriate amount of attention.

With recent changes incorporated by the Department of Labor as well as the general fee consciousness of clients, many excellent advisors are fleeing large firms and working as Independent Advisors.  We expect this trend to continue. We believe the only way to give truly unbiased advice, is by being independent and having access to a wide array of investment options.  Independent advisors will typically be more hands on with their clients, and are able to offer a holistic approach to your financial well being,  with the ability to work as a Fiduciary as well as offer lower fees than the big names.

Keep the four above factors in mind and you’ll be well on your way to selecting an excellent financial advisor!

The PWG staff is rounded out with financial experts in a variety of fields, including pension planning, tax consulting, estate planning, and investment management. Our multi-layered team can provide any individual, business, non-profit or other organization with trusted, expert advice. Our clients always come first. Contact us today to learn how we can assist you and your organization.

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