Important Tips For Hiring a Financial Advisor

If you are trying to plan for your retirement, want to try your hand at the stock market, or plan to do other important financial planning, having a financial advisor would be in your best interest. A financial advisor will ensure you put your money to the best use. If you have never had a financial advisor and aren’t sure what you should be looking for, know these important tips for hiring a financial advisor.

Consider Pay Structure

Different financial planners work on a different pay structure and you want to make sure you understand what it is and consider it before you hire anyone. Some advisors are commission-based, and that’s something that you want to avoid. When a financial advisor works on commission, that means they’ll make more money if you purchase certain insurance packages or invest in some mutual funds. You don’t want a financial advisor that is constantly pushing certain types of investments and insurance on you just so they can make some more money. You want a financial advisor that will work in only your best interest. Of course, fee-based financial advisors still have their downfall. Typically, this type of advisor earns about 1% of your annual assets. This means the advisor might encourage you to buy an expensive home or property that you don’t particularly need. However, it might be easier for you to pass on a house that you know you don’t need than pass on an insurance package that you don’t quite understand. If you can find an affordable financial planner that charges by the hour, that would probably be in your best interest. They make the same amount of money, even if you opt out of insurance packages or a private island. These planners have the purest motives, and you don’t have to worry about anyone pushing you to buy things you don’t need.

Check Their Background

When you hire a financial planner, don’t forget that they’re working for you, not the other way around. Many people hire services like this and feel like they need to be submissive. You should be interviewing the advisor. Ask if the person has ever been convicted of a crime, ask to see the license, and ask the advisor to write down references that you can call. The person you are hiring is going to have some control over your money, and you need to make sure that it’s someone you can trust. You wouldn’t put your hard-earned money in the hands of a stranger on the street, so you shouldn’t put it in the hands of a stranger behind a desk.

Ask for Recommendations
 
The most simple thing you can do is ask around for recommendations. Asking friends and work colleagues if they recommend anyone is your best bet. If there are people you trust who have been seeing the same financial advisor for years with success, it’s a good indication that it’s an advisor you would want to work with. It’s best to avoid a financial advisor no one knows. It doesn’t mean they won’t be good at the job; but when it comes to your money, it’s better not to take any chances. Financial advisors who work for large, regulated companies tend to come highly recommended, so check out those companies. You can look at the Fisher Investments top 10 RIA here.

Verify Credentials

Just looking at credentials doesn’t prove anything, you need to verify them. The financial advisor should be a certified financial planner (CFP). If certified financial planners get into any trouble, their disciplines become public knowledge. These disciplines can include a suspension, letters of admonition, or even a license revocation. The good thing about this public knowledge is that it’s very easy to find. You can simply go to the website, click on the state, and there are lists of names under each type of discipline. Make sure you look through the list and ensure the financial planner you are looking into isn’t on it. If they are, move on to the next person. You can also verify the certification on the same page. All you have to do is fill out the person’s information and you will know for sure.

Avoid Guarantees

You might find a financial advisor that continues to brag about performance and guarantees you certain returns in investments. There are rarely guarantees in the financial world, so this is a huge red flag. When you interview your financial advisor, pay attention to everything the person is saying. Make sure he or she isn’t promising a market-beating performance a certain return after a certain amount of time. If the person seems overly confident, it would be in your best interest to thank them for their time and walk away.

Hiring a financial advisor is a great way to manage your money. Just make sure you find someone you can trust so your money is in good hands. Follow these tips so you can be confident in your decision.

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Secure Investments That You Can Make

One of the deterrents of investing is how unstable the markets can seem. Many people are not willing to place their hard earned money in ventures that they are not even sure are going to succeed. The dismal state of the economy only proves the mistrust that many people view investment with. This fear of financing, however, can prevent many people from making a profit in the long run. There are, thankfully, methods to invest your money and limit the amount of risk that you face. Here are some of the ways you can invest with some measure of security:

Gold

Many investors advise people to begin buying gold. This is because, compared to many other commodities, this precious metal is actually stable. The value of gold has been quite consistent for many years. It is certainly a more established investment than currency. It also requires minimal risk. Once you have purchased a few ounces of gold, there is no immediate threat to your investment.

You can simply wait until you wish to sell the precious metal. When the prices are high enough, you can sell your amount of gold for a handsome profit. This type of investment ensures that there is no continued risk to your venture at all. As you have physical ownership of the commodity, you are entirely in control of what happens to it.

Savings Account

One of the advantages of a savings account is the liquidity that it offers. Few other investments or commodities can be accessed quite as easily as a savings account. Most banks allow you to withdraw a specific amount of money, at least six times a month. The more you have in your savings account, the more interest you earn. This is also a great method to encourage saving.

To make the best of a savings account, shop around for the highest interest rates on your savings. It is important to note the minimum required when opening the bank account. You should also check how much you are required to have in your bank account at the end of each month. To ensure that your income is truly safe, you should invest in a bank that is a part of the Canada Deposit Insurance Corporation (CDIC). Authorities such as these will insure the savings that you place in the account. This will allow you to protect your savings from unforeseen events.

Canada Premium Bond

The Canada Premium Bond (CPB) is guaranteed by the Canadian government. These bonds can be bought at most financial institutions throughout Canada. You can purchase one for as low as $100. Once you have bought a certain number of bonds, you will receive interest on this investment every year until the bond matures.

You can then redeem your original investment. This method offers you a great way to earn a little extra money, depending on how much you have invested. As this venture is guaranteed by a government entity, there is reduced risk.

Investment does not always have to be a gambling game. There are often times when you can remove the risk from the equation and make a stable investment.

 

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What is an Enhanced Annuity?

Are you nearing retirement? Have you been wondering what your options are? You might not know it, but there are many more options to your retirement than your retirement savings. Sure, this investment may have done you well for the past few years, but if you don’t want to constantly make withdrawals each month, you might be more interested in a plan that pays you automatically each month, just like the days when you were receiving a regular paycheck.

The Annuity

A regular annuity is typically set up when an investor has a lump sum of money, but would rather earn a small portion on those dollars with interest, as well as receive a monthly payment on a consistent basis. Normally, there are terms in place for each type of annuity (they can all be slightly different, depending on the institution offering the annuity) that will tell you how much you will receive each month, and how long your annuity payments will last. Depending on the amount you deposit and the amount you would like to receive each month, your monthly payments will change accordingly. Most often though, the common payback period is 20 years (based on my experience with various annuities).

The Enhanced Annuity

So let’s say your annuity is set to last for 20 years. It begins after your retirement date (typically), so you’re probably about 65 years old. What if you have a medical condition and you’re only expected to live for five more years? Then what good is a 20 year annuity? It would be foolish to invest your money this way! Why wouldn’t you instead look for a more short term annuity that would pay back a larger amount of money each month with a lower period for payback, say five years instead of 20?

Believe it or not, there is such a thing. It’s called an enhanced annuity. If you have high blood pressure, high cholesterol, type 2 diabetes, are underweight, overweight, or currently smoke, you may be eligible to reduce the term on your annuity and receive a higher income each month. If your condition is even more severe than these, then you might be eligible for enhanced annuities, which would offer an even higher level of income.

When you start shopping around for an annuity, you’ll most likely have to fill out some forms with medical information. Be sure to answer these questions honestly and accurately. If you do not, then you might only qualify for a longer term annuity, which could just go to waste if your life expectancy is much less.

I understand that you might be embarrassed to state various conditions on those forms, and it might be upsetting to think that you only have a few years to live on this earth, but think about it. If you’re in this situation, wouldn’t you much rather receive a larger sum of money each month and enjoy your life while you’re here on earth? I would!

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