Building your wealth requires solid investments, but designing a successful portfolio is no easy task. Even the most experienced financial advisors get it wrong sometimes, and investors new to the market typically make a lot of mistakes in their first few years. The solution is to choose a certified financial planner to manage your investments — one with the expertise necessary to guide you in the right direction. However, choosing the right commission-based investment adviser or fee-only financial planner in Kansas City can bring additional challenges. These are the top three points to consider when selecting financial planners:
Commission-Based vs. Fee-Only
How you pay your wealth management firm or financial services professional can make a big difference in the types of assets and transactions recommended to you. Commission-based investment advisors primarily make their income by receiving a percentage of the transaction fees you pay. As a result, it is in their best interests to constantly buy and sell the securities in your portfolio — whether or not this is in your best interests. Alternatively, you can hire a fee-only financial planner in Kansas City, and you will simply pay a flat rate as determined by your advisor.
Typically, fee-only financial planners set their fees by the hour, as a flat retainer or as a percentage of the total value of your portfolio. This removes the inherent conflict of interest that you face when your financial advisor’s income depends on your investment activity. Fee-only investment advisors are free to focus on selecting assets that are well-suited to your financial needs.
What Qualifications Does Your Candidate Have?
Financial planning is an extensive field, and no single person or firm can be an expert in every aspect of it. Areas of financial planning can include everything from making short-term gains through slight market fluctuations to long-term strategies for retirement savings. Once you have confirmed that potential financial advisors have basic qualifications, including appropriate licenses and a relationship with the National Association of Personal Financial Advisors, find out more about where they choose to specialize.
Have they obtained additional education, experience or licensing in areas of specialization? Are those areas of specialization compatible with your short-term and long-term financial goals? Even the most successful investment advisor could be the wrong choice for you if she or he is not well-versed in the sort of financial planning you need to achieve your objectives.
Does the Level of Service Offered Meet Your Needs?
When you are choosing a professional to manage your wealth, you are trusting that person with a responsibility that is critically important to your financial future. It is absolutely appropriate to interview providers as you would anyone else you are considering for an important job. Meet with your top three contenders to ensure that your investment strategies, level of risk tolerance and level of service preferences are compatible. If you prefer a cautious approach to investing, choose professionals who are committed to providing appropriate recommendations based on this instruction.
Putting care and attention into selecting your fee-only financial planner in Kansas City is one of the most important decisions you will make in your financial life. This individual will be responsible for managing your portfolio, and the recommendations she or he makes will have a dramatic influence on the rate at which you build your wealth.