How to Choose A Financial Advisor

If you receive payments from a structured settlement, ensuring that your payments serve your needs best is a primary concern. Depending on the size of your settlement, you might want to invest some of it—and that’s where a financial advisor can play an important role.

There are many economic factors related to investments that are out of your control; however, you can influence how someone manages your money. An experienced financial advisor who can wisely direct you toward safe and profitable investments, and who understands your interests and priorities, is important.

Here are some things to consider when selecting the best financial advisor for you.*

Do Your Homework

Research each advisor you are considering. In addition to websites, you can view profiles of investment companies or individuals in the Financial Planning Association and the National Association of Personal Financial Advisors.

Select the Right Type

Advisors for some organizations operate as fee-only, meaning they will not earn commissions for selling your specific investments. Their flat rates are usually based on the assets you put under their management. Investors that receive payments from annuities, or life or disability insurance, might consider a broker-dealer to cover a wider array of investment options.

Know the Cost

You should know how much an advisor’s services will cost, and whether a company has an incentive to sell you things. Ask potential advisors:

  • whether there is an initial planning fee,
  • whether they charge a percentage for assets under management, or
  • whether they profit from selling particular products.

Choose a Licensed Broker

Those financial advisors who have earned certifications will generally have the appropriate knowledge and professional training in their areas of specialization. Look for

  • certified financial planners (CFP)
  • certified public accountants (CPA)
  • personal financial specialists (PFS)
  • chartered financial consultants (ChFC)
  • registered investment advisor (RIA)
  • Investment advisor representative (IAR)

Professionals possessing these certifications serve different functions and focus on different financial areas, with CFP often considered the highest credential among financial planners. It is also helpful to find out what those particular specializations mean and how they will best serve you and your investments.

Whatever your needs, choose the type of financial advisor that will help you invest your money with your priorities in mind.

Narrow Your Search

Focus on the qualifications of your prospective financial planner. Look at things like experience, education, certifications and association memberships. Take a closer look at their business track records to include:

  • compliance,
  • fiduciary status,
  • methods of compensation,
  • types of services and
  • ongoing reports.

Finally, consider whether a particular advisor specializes in the service you need most — whether it be planning, investment advice or legal advice.

Meet In Person

Conduct a face-to-face interview with a potential financial advisor. This interview provides a great opportunity to look at the company’s staff and work environment. Write down questions you will ask beforehand to maximize the information the advisor provides. Prepared questions also will help you compare similar content between advisors.

Meeting the advisor also will allow you to gain a sense about whether your personalities will work well together. There is no set number of advisors to see, but meeting with more than one will give you a better sense of how to find the one that you feel is the right fit.

Check References

Most advisors will provide you with a list of references to help you assess their performance. When speaking to references, focus on objective information they provide.

As in your interviews, you want to ask each reference roughly the same questions so you have a baseline for comparison.

Questions To Ask Your Financial Advisor

Now that you’ve carefully selected a financial representative to work with you in managing or investing your structured settlement or annuity payments, you will want to get the most out of your time working with him.

Here are a few questions you should ask your financial advisor.

How Do You Get Paid?

It may seem like an awkward or uncomfortable subject, but as the consumer you have the right to know how the individual or firm sets up its fee structure.

Find out what portion of the fee goes to the firm, and what percentage they personally receive. Some good questions to ask are:

  • How do you get paid for investments you recommend?
  • Are you paid commission on investments or other products you sell?
  • Do you receive payments from investment companies you recommend?
  • Aside from what I pay you, what additional costs will I incur?
  • Do you offer different levels of service?

Your advisor should be happy to give you a straightforward answer to each of these questions. If not (by hesitating or not having the information), you might want to consider someone new.

What Experience Do You Have?

Many of the top advisors in the industry have certified designations — e.g. CPA, CFP — and carry their Series 7, 24, 51, 63, 65, 66 and insurance licenses. Ask:

  • What is your educational background?
  • What active certifications do you have?
  • What active licenses do you carry?
  • How many years have you been working in the field?
  • What professional development or training do you complete to keep your knowledge current?
  • What is the size of the typical portfolio you manage?

How Will You Protect My Assets?

Your assets always should be held with a third-party, reputable custodian. You also need to know whether your advisor or his firm ever have received disciplinary infractions. Ask:

  • Are you fiduciary?
  • What protections does your firm have in place to protect my investments from fraud?
  • Have you ever been disciplined for unlawful or unethical actions?
  • How do you stay in compliance with federal and state regulations?
  • Do you operate under different business models based on your clients’ comfort with risk?

Will You Be The Primary Person Working With Me?

If your advisor’s firm has a team of experts, make sure you know who to contact with specific questions, as well as how the team approach serves the individual customer. Ask:

  • Will you be the primary person responsible for my account?
  • Do you offer other services (such as wealth, insurance and estate planning)?
  • What kind of investments do you recommend?
  • Will You Communicate With Me Regularly?

Your advisor should be forthcoming and open in communication with you. In addition, by recommending resources it’s a good way to help educate their clients and give them a clearer picture of the process, while helping to build trust in knowing that someone is actually looking after the money they have invested. Ask:

  • How often do you communicate with a typical client?
  • How do you send out the reasons for buy/sell decisions?
  • Do you send a weekly market commentary, monthly investment outlook or other educational videos, fact sheets, industry updates or statistics?

What Is Your Investment Philosophy?

Ask your advisor to describe, in simple terms, his/her approach to making investments. In particular, you want to know how personalized your service is, and whether he/she will make you a priority. Ask:

  • Who is your ideal client?
  • How many clients do you take on each year?
  • Can you explain your client-service philosophy?
  • How can you ensure that each client receives professional and personal service?
  • How often do you evaluate my finances and provide an up-to-date forecast?

Do You Have A Succession Plan?

In modern society, nearly gone are the days when a person starts his career with a company and stays with it all the way to retirement. You have the right to know what will happen to your money if your advisor leaves the company either planned or unexpectedly. Ask:

  • What happens to my money if something happens to you?
  • Would you trust other members of your firm to manage your own money?

Choosing a financial adviser can seem a long and daunting process. But by going into the relationship with clear expectations and goals, you will maximize the chances for success in finding the right person for both you and your money.

If you’re currently receiving payments from a structured settlement and are looking to improve your finances, give SenecaOne a call today at 1-800-513-1384. As Your Trusted Source, we take a personalized approach to working with your financial needs and long-term financial goals.

*SenecaOne Finance and its affiliates do not provide financial advice, and this should be considered for general educational or informational purposes, not professional financial advice. What is provided here is based on current information and is subject to change. If you are seeking professional advice, please consult an accredited financial advisor or organization.

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