The right financial advisor can not only help you manage
your near-term money-related goals but can also help you establish a solid
savings plan for the future. Yet a large chunk of Americans are surprisingly
hesitant to enlist outside help. In fact, 45% of U.S. adults aged 40 to 59 say
they'd rather visit the dentist than make an appointment with a financial
advisor, according to an AARP survey.
Part of that sentiment might stem from the fact that many
Americans are embarrassed by the financial choices they've made and don't want
to share their missteps with an outside person. But part of it might also boil
down to a general
mistrust of the financial services industry -- something 65% of
Americans uphold rigorously.
The problem, however, is that the longer folks go without
seeking the help of an advisor, the less likely they are to meet their various
savings goals. While having an advisor won't guarantee success, 67% of adults
who have one say they're clearer on how much to save versus spend, according to
a recent batch of data from Northwestern Mutual. And in that same study, those with
an advisor were more than twice as likely to report feeling financially secure
as those without.
If you'd rather get a tooth pulled than sit down with a
financial advisor, it could be that you just haven't found the right person for
the job. But once you do, having that professional in your corner might really
change your financial outlook and future.
Finding an advisor you can trust
Financial advisors tend to get a bad rap for a number of
reasons, but if you take the time to vet yours properly, you may be pleasantly
surprised with the service you receive. First and foremost, source
recommendations from friends, colleagues, neighbors, and family members before
simply googling your way to the person who might come to manage your money.
Chances are, if someone you know has had a good experience with an advisor,
you're likely to follow suit.
Next, aim to find an advisor who holds to the fiduciary
standard. This standard states that an advisor must always make
recommendations that are in a client's best interests. Other advisors, by
contrast, might hold themselves to the suitability standard, which is
acceptable but not quite as airtight. The suitability standard dictates that an
advisor can only recommend investments that are suitable for his or her
clients. It does not, however, require that advisor to put clients' best
interests ahead of his or her own.
Another thing you'll want to look for in a financial
advisor is transparency with regard to fees. Advisors can make money in several
ways, the most common of which are charging a fee that's calculated as a
percentage of your assets under management, or taking commissions on the
investments you buy. Generally speaking, the former arrangement is more ideal
from a client perspective, but the latter isn't necessarily a deal-breaker. The
key, however, is to find an advisor who's open and honest about how he or she
Furthermore, your advisor should aim to educate you on
smart investment choices rather than simply make them for you. And your advisor
should also take your personal risk
tolerance into account when recommending investments for your
Finally, you'll want an advisor who will take the time to
understand your challenges and goals. Any advisor who attempts to apply a
one-size-fits-all approach to your account isn't worth your money.
You need the confidence an advisor can bring
Hiring a financial advisor doesn't mean admitting defeat on
the savings front. Quite the contrary -- it means you're making a smart
investment in your future while also making near-term goals more attainable.
And the sooner you start working with one, the more confident you're apt to
feel about major milestones like retirement.
And make no mistake about it -- that confidence can go a
long way in shaping other areas of your life. According to AARP, adults who
feel confident in their retirement savings experience lower levels of stress
and better physical health. And there's a lot to be said for that.
Of course, it's possible to feel secure in your financial
outlook without hiring an advisor. But if you're struggling in that arena, don't
let your preconceived notions about advisors prevent you from getting the help
you need. As long as you take the time to vet your advisor and find the right
one for you, you're likely to come away happy with your decision.
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here for the original article from The Motley Fool.