Steps
- Find an independent advisor from a trustworthy source. (An independent advisor is one who can offer many products from many companies, and who has no assigned sales quotas.) A referral from a trusted friend or relative normally works best. Don?t concern yourself with credentials. While education and training are certainly important, demonstrated loyalty and integrity are much more critical. If the advisor has done well by someone you trust, he?ll probably do all right by you too.
- Meet with the advisor. He will want to establish a sense of trust. Consider carefully how he goes about this. Is he confident? Does he seem to know what he?s talking about? Does he care about helping me, or just reeling me in? Is he trying to offer me a solution before he?s had an opportunity to understand the problem? Is he flashing around titles and credentials as if that?s all I should need to know about him?
- Be informed about the topics discussed. Read a book. Subscribe to Barron's. Subscribe to the Motley Fool website. Talk to your parents or someone else money-savvy. If necessary, see a fee-based advisor for a second opinion.
- Begin. Rarely is the result of implementing mediocre advice worse than the consequences of inaction and procrastination. Also, do your business with the advisor who devised your plan. He worked hard and deserves to get paid for it. If you choose to also visit a fee-based advisor, and he recommends something else, he?s earned his fee. Your original advisor has still earned the right to implement any solution.
Tips
- Most importantly, don?t wait; start planning right now! Time is the most critical component of a successful financial plan.
- Ask your friend, your dad, or your sister who he or she uses and how they?ve performed.
- Don?t pay for advice unless you truly feel an absolute need to do so.
- Use an advisor who believes in a comprehensive approach. An advisor who avoids or trivializes insurance issues is not qualified to create a sound financial plan. Life, disability, and possibly long-term care insurance should be the first priorities in most financial plans.
- Investment advice should include non-market options as well as market-based ones, particularly if you are nearing retirement.
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