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Finances for the Family

Choosing an Advisor for Your Financial Affairs

May 1st, 2013

Submitted by: Sun Life - Katy Plesuk

You don't have to be wealthy to get good advice about your financial matters, but if you want to have a million dollars, you'll need good advice! In fact, the amount of money you have isn't relevant. An advisor's expertise and knowledge can help you accumulate wealth and protect your family and your investments. But before choosing the person who's right for you, it's important to do your homework.

The first thing you must do is establish your financial goals. Be specific, and put them in writing. Clear objectives will help you create a plan with dollar value and within a specific time frame. To say, “I want to be wealthy,” is a desire. To say, “I want to have a million dollars by the time I'm 65,” is a clear financial goal.

Once you know what you want, an advisor can help you develop a strategy to begin your journey to your targets. Often your incoming money and outgoing expenses will be organized into a budget. Your assets and liabilities may be included in a net worth analysis. It'll help you see how realistic your expectations or goals are. And it'll guide you as you make crucial decisions about how much life, disability, and health insurance you'll need to safeguard your livelihood and your family's security.

It's also important to know your own level of financial knowledge and how that'll influence your need for advice. If you're just starting to build your financial plan, you may need more assistance, for example understanding insurance and investment terms. On the other hand, if you're experienced, you may want more input into your financial strategy.

The next step is to choose an advisor. Before you talk to potential candidates about your personal financial information, you should always check their credentials. Are they accredited with a recognized financial industry organization? Are they licensed to sell insurance products? Which investments are they licensed to sell? Are they licensed to provide financial planning?

Interview your advisor

Here are more important questions you can ask your potential advisor:

  • What qualifies you to make decisions about my life and money?
  • Do you have three client references, not including family or friends?
  • Are you allowed to sell one company's products, or several?
  • What kinds of insurance are you able to provide?
  • How can I get updates on my holdings?
  • Do you provide sample portfolios and their historical performance?
  • Can you design a strategy tailored to my financial goals and based on my risk tolerance?
  • Do you have relationships with other professionals who can help me?
  • How are you compensated and what commissions do you make?

Advisors may charge an hourly rate, a percentage of assets under management, or receive a commission from the sales fees on the insurance and investments recommended. Make sure you understand how your advisor is compensated. And keep in mind, fees paid to advisors are tax deductible.

All this may take time and effort, but it's worth it to find an advisor you trust and feel comfortable with. You wouldn't trust the first dentist you come across in a directory to work on your teeth.

Be sure to channel a portion of your inquisitive energy into checking out books, magazines, and the Internet.

Asking the right questions, and adding some research of your own will enable you to choose an advisor who can help you set a wide variety of clear goals, from providing for your family to becoming a wealthy by the age of 65!

Tags: Dads, education, Moms

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