Personal Finance

Things to remember while hiring a financial professional

Managing one’s finances is a difficult enough job. Still, for a common man, he can get away with a bit of brain scratching and late hours. But the job assumes a daunting proportion when you are sufficiently rich. In such cases, you might not be able to manage both the financial matters and your day-to-day job or business that actually makes the money. A one-stop solution to this dilemma is hiring a financial professional. A financial professional is one who is trained the tricks to manage finances and such a job will always remain safe in a competent expert’s hands.

But how well your finances are managed depends a lot on the ability of the hired financial professional. Hence before start looking for a finance expert, a word of advice; never hire an amateur. Hire one who has special credentials and certifications under his belt. If you could get an experienced finance professional, then the better.

In order to hire a financial professional, where one should start head hunting? There are several financial firms in the town who are offering such services. Details about such centers are available from the company websites. One can also take references from your friends or other people who are currently their clients. The way you reach the finance firm doesn’t matter in the end. But one should be careful not to make the mistake of hiring the wrong person.

It will be ideal if you could arrange for a one-to-one meeting with your prospective finance professional. As one starts off to meet the person, he/she should be prepared and planned in his/her approach so as to make the maximum out of the personal interview. If you have an eye for detail and has a rational brain, one such conversation is enough to gauge the abilities and talents of the person. A competent finance expert, in return, will ask you about your current financial situation, your goals, plans for the times ahead and your attitude towards saving and investing.

Basically – as a client – one would be keen to know about three basic areas of services in the first place. They are the service background, fees and the services provided. Also ask the person a set of questions which ideally cover the areas that are vital in deducing the character and qualification of the finance professional.

They are:

  • Ask for his experience in dealing with people like you. Find out the people and the companies with which the person had been associated with in his/her career. As a safe bet, always look for finance professional should have more than 3 years of experience.
  • Query about his qualification. Many people involved in finance related jobs use the term ‘finance professionals’. Ask the person if he/she has a valid certification. In this regard, one can contact the Financial Planning Association and Certified Financial Planner Board of Standards for further references.
  • What are the services he/she offers? This is directly depended on the person’s credentials, licenses and expertise domain. One cannot provide all the services at a time. If there is anybody doing it, then he/she is a fake entity.
  • Enquire in detail about how the finance person is paid for his/her service. Generally, they fall under fee-based, fee-only, and commission-based. Also see if he/she is charging hourly, a flat fee or is flexible in his/her pay demands.
  • Ask the advisor specifically if he/she has a partnership or relationship association with any business house that could possibly affect his/her professional judgment abilities, while working for you. Demand a written description of conflicting interests if there is any.
  • Interview him to bring out any aberrations that had occurred in his professional career. Ask specifically, if there had been any incidence of any regulatory organization reprimanding him for unethical or unlawful behavior. In this regard, ask for a copy of Form ADV – the advisor’s registration form. Its Part 1 has his/her qualifications and the record for any such problems with regulators if any.
  • Also contact regulatory organizations such as NASD and NAASA and perform a background check of the finance expert’s credentials.
  • Most importantly, if you are deciding to hire the person, ask him to give in writing the services which all he/she provides. This is vital if some legal tangles arise at a later point of time.

These are some general suggestions that could help one select a competent finance professional. At the same time, these are no magic queries that clearly distinguish chalk from cheese. A lot depends on the client’s discerning sense, his financial acumen and yes, lot of common sense. In the end, it is the user who is going to make the final call. And he simply cannot make a mistake there.