How Do You Know You’re Getting Good Financial Advice?

Good financial advice can mean different things for different people. For some it means being able to get a hold of your financial advisor at any time, for others it means finding an advisor who explains investment options in detail and for some good financial advice equals making money.

The truth is a good financial advisor has several beneficial qualities and giving good advice is one of them.

The advisor listens to your needs

There is nothing worse than a financial advisor who gives blanket advice because it makes the client feel undervalued. Personal finance is personal for a reason – it should be tailored to each individual client’s needs and goals as well as their unique situation.

A good financial advisor listens to your needs, addresses your concerns and explains the difference between all investment options.

Your meetings are a two-way conversation

Good financial advice comes from the advisor understanding your financial goals, comfort with risk and time horizon for investing. This information comes from having conversations.

As a financial planner, I like to spend the first part of all meetings letting the client talk about why they booked an appointment and what they want to achieve. Sometimes the goal is paying off debt, sometimes it’s saving for retirement and sometimes it’s build wealth and invest wisely. Whatever the reason, it’s hard for advisors to give tailored advice if they don’t take the time to understand what the client wants.

You understand how you’re invested

So often people think good financial advice means increasing their bottom line. Choosing the right investment options is a part of receiving good financial advice, but it’s not everything. The question to ask is, what is the right investment option? Well if we knew that we would all be financial advisors.

Choosing the right investment option is not buying a stock today and selling it tomorrow at a huge profit. That’s not what financial advice is all about. That’s the job of a stock broker, not a financial advisor. An advisor focuses on your entire financial life, not just the next big thing.

You’re comfortable with the risk

How do you feel when you look at your quarterly account statements? If you’re upset at the bottom line that is one thing – but remember no one can predict what will happen in the market from day to day. However, if you’re uncomfortable with the risk of the investment options a.k.a. the level of fluctuation in the type of investment then it’s time to book an appointment with your financial advisor.

Good financial advice is pairing the correct asset allocation with your risk tolerance. If you’re risk-adverse, lower risk investments such as fixed income and bonds may be the best options. You won’t make a huge profit, but you’ll also have the peace of mind that the value of your account won’t experience huge fluctuations day to day.

So, let’s get back to the original question, what makes good financial advice?



Join the newsletter

Subscribe to get our latest content by email.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit
Related Posts Plugin for WordPress, Blogger...

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.