Wealth-Building: How to Prepare for Hiring a Financial Consultant
Regrettably, some people don’t begin planning their retirements soon enough, nor do they fully grasp the principles of growing retirement income. I attribute this to the lack of good asset allocation advice. There’s actually plenty of good free financial advice out there, but payment to a consultant is usually involved if you want custom information. So, many people opt to go it alone, only to discover too late that they won’t have what they need to retire. This is why experts recommend using financial pros to develop retirement plans. And because it’s your money, you owe it to yourself to do your homework first so you can ask informed questions of the financial advisor. Getting the lay of the land, financially speaking, can also lower the financial consultant’s bill.
Here are some of topics you should investigate before you hire a professional financial advisor:
How insurance impacts your financial future
Some people don’t need information on term life insurance and other forms of insurance protection because they don’t have anyone depending on them and causing them to need life insurance. But those who do need it should choose wisely. Understanding the difference between universal life, term life and variable universal life (VUL) will allow you to pick the option best for you. And I’ll clue you into one fact right from the start: cash value policies, such as whole life and universal life usually provide the worst return on investment and will often leave your loved ones with inadequate coverage. So you should keep that in mind when you talk to a consultant.
The differences between no-load and load mutual funds
Some financial consultants get commissions on sales instead of an hourly rate, so it’s in their best interest to suggest “load” funds (those that have service fees). Sometimes you’re better off paying by the hour for financial consulting, so you can get objective advice. If you study the difference between load and no-load funds, you’ll see why this distinction is important.
Have an idea when you will retire and how much money you’ll need
Before you meet with a financial planner, it would be prudent to know approximately when you want to retire and how much money you think it will take to maintain your lifestyle. That will help him or her to work with you to create a plan to get you where you need to go.
Once you’ve done the homework above, you’ll want to to do just a little bit more: make some inquiries of your friends and family if they can recommend someone before you choose a financial planner. Once you have those recommendations, see how well that person has done with his own finances. If you don’t see evidence of that they did it for themselves, they won’t be able to do it for you!
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Tags: financial advice, life insurance advice, life insurance basics, mutual funds investing, retirement advice, retirement investing
