Finding a reliable financial planner was difficult enough. The court of appeals recently overturned the Department of Labor’s pending fiduciary rule, further confounding financial customers. It’s important to know whether your financial advisor will serve as a fiduciary for you or will just look for investments that are right for you. It’s also crucial to figure out whether this is a person you can trust who understands your needs, takes a relaxed approach, and has the expertise you need for your specific situation. E.A. Buck Financial Services – Kailua-Kona Retirement Planners is an excellent resource for this. To help you get through the often frustrating process of finding a financial advisor, we’ve put together a list of our top five questions to ask.
1. Do You Have Fiduciary Responsibilities?
Advisors are legally obligated to place your interests ahead of their own under the fiduciary principle. Advisors who work under a fiduciary policy must report any conflicts of interest and let you know if they receive any compensation for promoting products or other professionals. They must be open about the fees paid to advisors for their services.
The suitability level, on the other hand, allows advisors to recommend investment products that are suitable for you. There is no criterion by which you can determine whether an investment can help you achieve your objectives or is in your legal best interests. There is also no obligation to fully report any conflicts of interest, which may encourage an advisor to recommend products with higher commissions rather than comparable products with lower fees.
In both the fiduciary and suitability standards, there are great advisors and bad advisors. We follow the fiduciary precept and place a high importance on the trust that it offers.
2. What qualifications do you have?
The credentials and experience of an advisor are essential. It provides you with valuable information about the advisor’s experience and areas of expertise. There are over a hundred different forms of credentials, which can be very confusing. If you’re looking for a financial planner, you should at least be aware of these three qualifications, which indicate a high degree of training and dedication:
CERTIFIED FINANCIAL PLANNER ® (CFP®)
CFP® practitioners have completed university-level financial planning coursework, have sufficient experience, and have passed the CFP® board’s rigorous test, which covers 72 topics ranging from investment and risk management to tax and retirement planning, legacy management, and the application of all of these disciplines. They also pledge to continue their education and maintain a high ethical standard.
Chartered Financial Analyst® (CFA®)
Professionals must pass three rigorous examinations to achieve the CFA designation, each of which requires a minimum of 300 hours of master’s degree level training in financial accounting, portfolio management, and asset management.
Certified Investment Management Analyst® (CIMA®)
CIMAs specialise in asset allocation and fund management. Applicants must meet expertise, schooling, assessment, and ethical standards for the programme of research, which encompasses five core topic areas. CIMAs must also make a commitment to further education. www.imca.org for more information.