Personal Money Management 101

How to choose a Financial Advisor

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  • No shortage of people willing to tell you what to do with your money - one of the growth professions of the 90's and new millennium.
  • Types of advisor
    • Tied advisors - work for one institution - will only advise on that institution's products.
    • Tied advisors will not necessarily advise on the best deals available.
    • If you use tied advisors be sure to compare quotes from 3, 4 or however many you have time to go to.
    • Independent advisors advise across the whole range of products available. Should find the very best for your needs.
    • Independent advisors are paid in 2 ways:
      • Commission based - advisor earns commission from products they recommend
      • Fee based - client pays advisors fee, advisor refunds any commission to client
    • Commission based costs nothing for advisors time - but they may have ulterior motives (ie higher commissions) for recommendations.
  • Important points
    • Is the advisor licensed?
    • Does s/he belong to the relevant professional bodies?
    • Is s/he bound by any code of practice?
  • Advisors can assist in investment process, but remember it's YOUR money at stake.
  • Ask your advisor difficult questions - and lots of them.
  • Never abdicate your responsibility to an advisor.
  • Don't invest in anything you don't understand.

On the Web:

The Institute of Financial Planning The UK professional body of Financial Planning.