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Kanani wealth management advisory news - blog
Hire a Financial Advisor
Business Consulting

Choosing a Financial Advisor (Part 2)

 

Consistent Financial Advice on Demand

Individual investors may engage with a financial planner or advisor just once, either to create a comprehensive financial plan or to answer a single question. A fixed price or an hourly cost is the norm for these sessions. If your firm has given you a buyout deal to retire early, in which case you might hire a financial advisor to benefit from their advice. If your firm is giving incentives such as increased pension benefits, they can assist you in examining the long-term costs and advantages of such a decision and help you make an informed choice about whether or not to accept.

Asking a financial planner to help you put together a thorough financial plan or assess your existing position is an additional option you may want to consider After learning more about your money, you’ll likely walk away with concrete tasks or a strategy to follow.

Keep in mind that a one-time engagement may turn into a long-term partnership or frequent financial inspections. A registered investment advisor (RIA) is not the same as a financial advisor. One of the primary roles of an RIA is to provide financial advice and actively manage a client’s accounts.

 

An investment in a full-time financial advisor

You may hire a financial advisor for short-term or long-term needs, just like there are various reasons to hire a financial advisor for a one-time job. Investment management services and financial planning advice are often provided by financial advisors in a variety of methods, but it is customary for both services to be provided in tandem. Planning for retirement, preparing for your children’s college, and many other factors fall under this umbrella.

In some cases, a part of the assets under management is used to pay for these services (AUM). Flat retainer fees are also available in some cases. It’s common for the investor and advisor to meet at least twice a year, but the client may always contact their advisor for any questions or concerns that may emerge during the time between official meetings.

As a result of this arrangement, the investor receives guidance on their entire financial status throughout the various stages of the investment process.

 

The Advantages of Hiring a Personal Financial Consultant

If you hire a financial advisor when you’re unsure, upset, or just plain uneducated about a wealth management subject, it may be a lifesaver. There is a great need for expert financial guidance, given that most people are unable to look far enough into the future to even conceive their retirement, let alone plan for it. To gain a complete picture of where you want to go in life, a good advisor will ask you a lot of questions—some of them difficult.

The financial advisor may put together a strategy and provide you guidance on investments, retirement planning, estate planning, tax liabilities, and your children’s college education after all of the elements are in place. Having an advisor with a wide range of experience can help you make some of the most difficult decisions of your life.

Some financial advisors go even farther, actively assisting you in purchasing insurance and financial products like mutual funds. While not all financial advisors can trade stocks themselves, many can connect you with a broker or money manager who can. They can also help you find trust and estate planning consulting or an accountant.

 

Constraints Faced By Financial Advisors

Even the best financial advisors sometimes make mistakes, so it’s important to have an open mind when hiring one. Choosing a bad financial advisor might cost you a fortune. When working with an advisor, keep an eye out for the following warning signs:

  • Some financial advisors may encourage their customers to purchase and sell stocks more often than required in order to earn a bigger commission for themselves.
  • Highly-expensive investments, such as mutual funds, are recommended instead of cheaper index funds or exchange-traded funds (ETFs).
  • Bad Planning: A well-intentioned professional advisor who puts together an unreliable financial strategy will do you no good. Given the ever-changing economy, interest rates, and life’s unexpected twists and turns, strategies must be adaptable (loss of a job, long-term illness, etc.). The first step, though, is to lay out your strategy in great detail.
  • When an urgent need occurs, even an unbiased advisor is useless if they never reply to your calls or emails. In many financial and investing situations, timing is critical, and you need to trust that your advisor will respond timely.

Ask whether a potential financial advisor is a fiduciary. This implies that they are legally obligated to behave in your best interest, as they are employed by you.

 

Fiduciary Financial Advisors

Make sure that your advisor has a fiduciary obligation to you in order to prevent any issues. Financial advisors are required to operate in their client’s best interests at all times, regardless of whether or not they have a conflict of interest.

A financial advisor can’t recommend products with high-cost ratios or sales charges only because they’re more profitable for the advisor (in the context of financial planning)(as a result of the commissions that they earn). If the advisor receives compensation from both XYZ Mutual Fund Company and ABC Company, he or she must disclose this to you in full and explain any recommendations they make to you.

When you work with a financial advisor, you can expect him or her to take the time to understand your financial goals and risk tolerance and to advise you accordingly. That the mutual fund in which they place you will rise by a specific amount or even raise at all cannot be guaranteed by a financial advisor.

A high-risk, high-growth stock fund would be against the advisor’s fiduciary obligation if you explicitly state that you wish to invest cautiously and protect your capital at all costs. The advisor’s fiduciary duties would be violated if he or she recommended high-interest trash bonds without disclosing the bonds’ significant default risk.

It’s critical to know how much your advisor is paid since this might have an effect on the quality of the advice you receive. If a financial advisor is a fiduciary or not depends on how they are licensed and governed.

 

 

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Investment advisory services are offered through Kanani Advisory Group, a Registered Investment Advisor. David Kanani CA License #0B34918, Neda Kanani CA License #0L51510. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges, and holding periods which vary by the insurance company. Annuities are not FDIC insured. The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. The National Ethics Association (NEA) is a paid membership organization. All NEA Background-Checked members have successfully passed the annual seven-year background checks for criminal, civil, and business violations in order to meet the membership standards. However, the association provides no guaranteed assurance warranty of the character or competence of its members. Always make financial decisions on the basis of your own due diligence.

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