Mistakes in Choosing Financial Advisors

Mistakes in Choosing Financial Advisor - as part of the expert series by GeoBeats. The biggest one is, they are not really aware of how the advisor gets paid. Why is this important? Because advisors get paid in a variety of ways. One, some get paid on commission, which means they do not make any money unless they sell you a product. Others are called fee only advisors, you pay them by cheque, so you are actually writing the cheque to them to pay for advice. You should also investigate your advisor. Most, a lot of people just get it out of the phone book or take a recommendation from their family or a friend and really, truly, you should go and do a little bit more research and it is quite available to you on the SCC website: advisorinfo.scc.gov. There is a form called Form ADV which details in plain English an advisors business practices. I highly recommend looking at that. Another mistake people make in choosing an planner is not understanding the difference between what a fiduciary advisor is and a non-fiduciary advisor. I know that "fiduciary" word is a little bit daunting. It just means that the advisor has your best interest at heart at all times when they are giving you advice. The other standard is something called a suitability standard. It just means the advisor has to recommend things that are suitable, which is a very vague term. You want a fiduciary advisor helping you. Do you need help with budgeting? Do you have debt problems? Do you know when you are going to retire? Or are you looking to figure out if you could send your kids to a private college? Get these things sorted out in your mind first so that you know what type of advisor you need. Not all advisors, for example, are debt counselors. Some are just investment advisors, that they want to invest your assets. They do not do financial planning. So do a little research on the advisor and find out what they specialize in and if it fits the need that you have.