Financial Advisors & Financial Product Providers can make your Difference
Many people mistakenly believe that since they are not “rich” they do not need to do any financial, estate and gift planning. This attitude can be financially harmful and can be avoided with proactive action.
In support of The Improving Financial Awareness and Financial Literacy Movement Movement, we thought an article on selecting “your right” financial advisors and right financial product providers would be interesting and helpful.
Preview The Improving Financial Awareness and Financial Literacy Movement below
https://www.home.thefinancialawarenessfoundation.org/pdf/TFAF-TIFA-FLMovement-Ghana-ExecSum.pdf
Financial decisions you make today will have a major effect on how you will be able to live out your lives. It’s important that you carefully select qualified advisors to guide you through life’s changes and challenges. If used properly, the right financial advisor(s) can save you time, money and heartaches.
There are many types of financial advisors and financial product providers to choose from. These many include attorneys, accountants, bankers, credit/debt counselors, financial planners, investment advisers, life insurance brokers and agents, money managers, realtors, wealth managers, registered representatives,
stockbrokers, trust officers and many others.
Who and how you choose depends on your specific needs. Many financial advisors and financial product providers offer more than one service. For example, some law firms provide tax preparation services and function as financial advisors. Accounting firms may go beyond the scope of tax preparation and serve as mortgage brokers, insurance agents, money managers and/or financial advisors.
A number of life insurance agents and stockbrokers are also qualified as financial planners.
HOW FINANCIAL ADVISORS & FINANCIAL PRODUCT PROVIDERS ARE COMPENSATED
Financial advisors and financial product providers are usually compensated either with commissions or fees, some are compensated by both.
COMMISSION-BASED ADVISORS & FINANCIAL PRODUCT PROVIDERS:
These will not charge any direct fees, provided that you buy your financial products through them. The advantage is that you do not pay directly for services. The disadvantage is that your provider might lose objectivity or provide you with financial products that you don’t need but that provide the person with excessive commissions. Commission-based providers are usually found through brokerage houses, insurance companies, banks, credit unions and financial planning firms.
FEE-BASED ADVISORS
These advisors charge you for their time. They work on an hourly or project basis or charge a fee based on a percentage of assets managed. The advantage of this type of arrangement is maintaining the advisor’s objectivity and independence. The fee advisor may also direct you to no-commission or low-commission products.
The disadvantage of fee-based advisor’s is you pay direct fees even if you do not follow their advice. If financial products are involved, you may still end up paying commissions along with the fees.
Fee-based advisors are usually found through accounting firms, law firms, trust departments and financial planning practices.
COMMISSION-AND-FEE-BASED ADVISORS
These advisors or financial product providers receive compensation both ways. Some charge a flat fee or hourly fee for services rendered, then receive commissions if you buy financial products through them. Others offset charged fees with their commissions, while others rebate commissions back to the client.
These advisors are in a position to “double dip”, receive double fees. They are also in a position to reduce their clients’ overall costs for financial products and services depending on their skill set and professional ethics.
These types of advisors are usually found in accounting firms (Financial Advisors/Planners in Ghana may sell financial products to their clients or refer them to associates who do the selling and receive commissions), some law firms, independent brokers and financial planning practices.
FINDING THE RIGHT ADVISOR
Choosing the right financial advisor for your particular situation is an important decision. Selecting a financial advisor is a lot like choosing a doctor, dentist, family counselor or other trusted professional.
Start by asking your current professional contacts and your peers for quality referrals. Then check them out further. If you do not get satisfactory input, check with professional associations for advisor referrals.
MEETING WITH A FINANCIAL ADVISOR
Before meeting with a prospective financial advisor or financial product provider, sit down and outline your goals and your current and future needs.
Determine what services or financial products you require: a financial review, investing advice, tax planning and/or preparation, insurance planning, estate and gift planning, business accounting services, etc.
When interviewing financial professionals, evaluate them according to personal
compatibility, expertise/experience, degrees/certification, professional
references/reputation, ability to understand your needs, size of their firm and their fee/compensation structure.
You should feel free to ask a prospective financial professional direct questions such as:
- What is your background? Your firm’s background?
- What is your area of specialization?
- Do you have expertise in (an area specific to your needs)?
- Will you be working on my account or will your staff? If staff, will a specific staff person be assigned to me?
- How do you get paid: fixed fee, hourly or commission?
- How much will I be charged?
- Will you quote a fixed fee per assignment and provide a letter outlining our relationship?
- How many of your clients have situations similar to mine?
- Have you ever been sued for professional reasons? If so, why? What was the outcome?
- Will you provide a list of professional references and/or current clients?
For existing financial professionals, ask yourself:
- Has my professional completed tasks requested in a timely manner?
- Has the professional worked within the fees quoted?
- Does the professional contact me with information valuable to me?
If you are not satisfied with an advisor’s or a product provider’s performance or attitude, give them feedback and see
if they are willing to meet your needs. If you remain dissatisfied, it’s time to find another.
USING THE TEAM APPROACH AND GETTING A SECOND OPINION
If you are faced with making a significant financial decision and you are not clear about your options, do not hesitate in bringing your financial professionals together for a joint call(s) or meeting(s), or at least seeking a second opinion from another qualified professional.
“Never buy or be sold a financial service or product you do not understand to your satisfaction.”
Over the years, financial advisors and their firms can play a very important role in helping you reach and maintain your financial goals. By following the above guidelines you should improve your chances of selecting and working successfully with advisors appropriate for your situation.
Contact Peter Kwadwo Asare Nyarko for Speaking Engagements, Group and Personal Financial Planning, Financial Coaching Sessions and Trainings.
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Email: peternyarko403@gmail.com
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