Wealth-Building: How to Pick a Financial Consultant
Unfortunately, some people don’t begin planning their retirements soon enough, nor do they fully grasp the principles of growing retirement income. I attribute this to the lack of solid asset allocation advice. There’s actually plenty of good free investment advice out there, but you usually have to pay if you want the information customized to your needs. So, many people opt to go it alone, only to discover too late that they won’t have what they need to retire. This is why experts recommend using financial pros to develop retirement plans. And since it is your hard-earned money, you owe it to yourself to do some research first so you can ask informed questions of the financial advisor. Getting the lay of the land, financially speaking, will also save you money if your advisor charges an hourly rate.
Here are some of topics you should know before you pay someone for financial advice:
How life insurance impacts your financial future
Not everyone needs information on variable universal life insurance and other forms of insurance protection because they don’t have anyone depending on them and causing them to need life insurance. But those who do need it should choose wisely. Understanding the difference between whole life, term life and variable universal life (VUL) will help you choose the right option for your circumstances. And let me give you one piece of information right out of the gate: cash value policies usually provide the worst return on investment and will probably cause your family to have inadequate coverage. So you should keep that in mind when you speak to a financial consultant.
The differences between no-load and load mutual funds
Some financial consultants get commissions on sales instead of an hourly rate, so they only make money if they steer you toward “loaded” funds (those that have service fees). Sometimes you’re better off paying by the hour for financial consulting, so you can get objective advice. If you study the difference between load and no-load funds, you’ll see why this distinction is important.
Have an idea when you will retire and how much money you’ll need
It’s a good idea to know approximately when you’ll retire and how much money it will take to maintain your lifestyle before you meet with a financial planner. That will help him or her to work with you to create a plan to get you where you need to go.
Once you’ve done your homework, there’s just one more thing to do: make some inquiries of the people you know if they have any recommendations before you choose a financial planner. Once you have those recommendations, check whether the candidates have built wealth in their own lives. If they haven’t been able to do it for themselves, there’s no way they’ll be able to do it for you!
