A financial adviser can help you make prudent decisions about how to invest and save your money. Choosing the right one is important to your financial well-being.
The Smart Asset website warns against these mistakes that could cost you money:
Not hiring a fiduciary. A fiduciary is ethically bound to act in another person’s best interest. You want someone who is committed to your goals, not theirs.
Hiring the first adviser you meet. Your friend knows a great financial planner? Great, but don’t stop there. Interview several so you can get an idea of how well you’ll work together.
Hiring the wrong specialty. Advisers have specialties, so you want someone whose specialty matches your goals, whether it’s retirement, estate planning, saving for a house or college, or something else.
Picking the wrong strategy. If you want to invest conservatively, don’t hire a risk taker. Talk about the adviser’s strategy to make sure it aligns with your needs.
Not checking credentials. Reliable financial planners have to pass rigorous tests, so make sure yours has the right qualifications.
Not understanding payment. Some advisers charge a flat fee, while others take a percentage of the money you give them to invest. Others take commissions from mutual funds, which could produce a conflict of interest. Find out up front how your adviser makes money.