How to Choose Financial Consultant Services

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Financial Consultant Services
Financial Consultant Services

Looking for a financial consultant services? Unfortunately, there are a huge number of companies and independent professionals offering these services to make your task really tough! Distinguishing a true financial advisor from a huge number of financial service types is important. In this case, it certainly helps to pose the right questions and gain a detailed understanding of what you wish to accomplish.

Here, you get a brief overview of essential selection criteria to make a prudent decision:

Type of Financial Advisor

Choosing a financial advisor depends on your individual needs. Sometimes, you may need counsel on retirement planning, education, charitable remainder trust, etc. Hence, it is crucial to ask the right questions once you meet a potential financial advisor. Here’s what you need to ask a professional advisor working for one of the financial consultant services:

– What is your specialization?

– How many years you have been in practice?

– Will you we working as a team?

– What is your investing approach?

– When did you join this company?

– What is the source of returns? Income? Capital gains?

– What are the tax implications of your strategy?

– Do you understand your objectives and constraints?

– Do you understand unique circumstances?

– Can you explain risk tolerance?

It is important that you ask all of these questions as per your investment preference, strategy and time limit.

Professional Background and Education

It is important to know that a financial advisor is a general heading that comprises of several subspecialties. A very broad range of credentials exists under the “financial advisor” category. Each credential caters to a unique area of competence. It is important that the professional clearly explains financial education and qualification in plain language. Listed below are some of the examples of credentials of a financial advisor working at consultant service:

FINRA Licensees

Series 7 – The category is comprised of a general securities representative who gets paid a commission for trading stocks and bonds. The exam for the same covers basic securities types as well as market regulations. It is important that a broker/dealer sponsors the candidate. A college degree is not required. A triennial regulatory element and annual firm element needed.

Series 65 – The exam is given to operate as an investment advisor representative in some specific states. Some credentials exempt the aspirant from this exam such as the CFP® and CFA. The exam addresses the various roles of a fiduciary, portfolio management, and retirement planning.

Insurance Agents

These agents are licensed by the state. The individuals can sell various types of insurance plans such as disability insurance, life, health and annuities. Agents are paid by commission. These individuals are required to accomplish biennial continuing education.

Chartered Financial Analyst (CFA)

Advisors who are charterholders must be college graduates, have four years of relevant work experience, pass three sequential rigorous exams in financial markets, products, financial accounting, analysis and individual and institutional portfolio management, belong to the conferring body, the CFA Institute and subscribe to its Code of Ethics and Standards of Professional Conduct. CFA charterholders are considered bearers of the gold standard in financial services.

Certified Financial Planner™ (CFP®)

CFP® Professionals are actually college graduates holding three years of relevant work experience. They complete applicable financial planning coursework. The individuals are also supposed to pass a two-day 10-hour exam covering financial planning topics including investment, education, taxes, insurance, employee benefit and estate planning. To adhere to Code of Ethics and Professional Responsibility and Rules of Conduct and Financial Planning Practice Standards, these professionals need Biennial continuing education (30 hours).

Chartered Life Underwriter (CLU®)

This is a designation with a focus on individual and business insurance planning. All successful designs are college graduates and hold over 3 years of qualifying work experience. They have also accomplished 8 courses and corresponding exams successfully in the areas of insurance and financial planning. They also subscribe to The Code of Ethics and Procedures of The American College, the conferring body. These individuals need biennial continuing education of 30 hours. All Chartered Life Underwriters archetypally hold an insurance license.

Chartered Financial Consultant (ChFC®)

Conferred by The American College, this particular designation demands successful completion of eight different examinations with a focus more on financial planning. Work experience, ethics and continuing education requisites are similar to that of Chartered Life Underwriters.

Certified Public Accountant (CPA)

These professionals hold an undergraduate degree or equivalent coursework in the field of accounting. They pass all parts of the CPA exam. The CPAs also comply with laws of the state(s) in which he or she is licensed to practice. The CPA characteristically is more focused on tax planning.

Some Important Questions to Ask the Financial Consultant Service

In what way is the advisor compensated?

Some of the advisors only proffer advice on a fee-for-service basis. They accept fees on an hourly basis, fixed dollar or percentage of assets under management). Some of the others may charge a commission for implementing recommendations. There are some advisors who charge a fee and commission. It is important to understand the way an advisor is remunerated. This will provide you an insight into what may motivate him or her.

Do the professionals working for your company adhere to a code of ethics or professional standards of conduct?

You need to enquire whether a professional subscribes to a code of ethics be certain about when asking his or her professional and educational background.

I wish to learn about an advisor’s background. How can I go about it?

Simply visit the website of the organization or agency conferring the license or designation. This will supply you with the requisite information on the background of advisor, including any sanctions for unethical practices.

Wrapping Up

Choosing a financial consultant service is certainly no small task for any investor. The selection process should involve understanding one’s own requirements and the services offered by various reputed advisors. To move the process in a positive way, know some of the standard questions to ask from professional before making a decision. Financial advice is no less than a medical or law profession. You need to be really sure before investing your time and money. Look for experience, reputation and clientele when making a final decision.

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