Whether you need Asset Management or minor financial planning help, choosing the right financial manager is vital. Therefore, you must define your financial needs, research financial managers and their companies and estimate the fees you will pay.
Define Your Needs
Because advisors, planners, and managers have different specialties, you should define your financial goals prior to seeking financial help. For example, are you setting up a college fund or retirement fund or seeking a residual income? In addition, do you want to invest in physical assets, such as real estate, or intangible assets, such as securities?
Identify whether you seek steady long-term growth over time or high short-term gains for a specific purpose, and explore any moral and ethical standards that may affect your investment choices?
Calculate your initial investment, regular contributions and desired tax liabilities. Finally, evaluate your risk tolerance. For example, if you are young and starting a retirement fund, you may be amenable to higher risk, but if you are close to retirement, you may prefer lower risk.
Assess Managers and Firms
References, referrals and reputations are important. However, search for a fiduciary, as they are legally required to act in your best interest. In addition, identify your prospective financial managers’ longevity in their positions and how many different companies or funds these managers have worked for.
Review the manager’s investment record to identify steady long-term growth. Also, do not limit your investigation to specific periods, such as three years or a previous recession, as these periods may not reflect the advisor’s actual skill.
Assess the services the advisor and firm offer. Investigate the firm’s financial strategies because your manager will be subject to these strategies. For example, are there investment minimums; will the advisor buy and sell without your consent, known as discretionary management; and what types of investments does the firm prefer? In addition, will your moral and ethical requirements be respected?
Research the firm and manager’s fee schedule. Some charge a flat monthly or yearly fee, whereas others charge a percentage of your assets. Therefore, if you have $2 million in assets and your manager charges a 1% fee, you may be paying up to $20,000 in fees each year. This fee amount will also increase as your portfolio value increases. Finally, some services, such as retirement or college funds, may have an individual flat fee. Determine if the service you receive is worth the fee you will pay initially and over time.
After you identify your financial planning needs, research the companies and planners available and estimate your fees, you are ready to sit down with your chosen financial manager and start preparing for your financial future.