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How to Make sure If Your Parents Have the Right Financial Advisor

Are you worried about the financial security of your elderly parents? How are your parents managing their finances? Is the financial advisor hired by your parents the right one? Can they trust the advisor with their hard-earned money? These are some questions that can often pop-up in your mind while thinking about your parent's financial stability. A financial advisor can tell you how to manage and grow your money. But for this, the advisor should have the right qualifications, experience, and knowledge about various savings and investments products. The financial advisor should also have the ability to assess the current economic situation. Based on this, these professionals can carve out a financial plan that can meet your parents’ long-term goals. Nobody wants to lose their life’s earnings. Thus, it becomes important to find out whether the financial advisor hired by your parents is the right one.

Outlined below are a few important points that can help you find out the credibility of a financial advisor:

  1. Is the financial advisor well-qualified?
  2. Check whether the financial advisor possesses a Series 7 certification. The Series 7 certification refers to the ‘General Securities Representative License’. Financial advisors must pass this examination that covers the basics of investment. The examination also includes questions on the regulatory laws. In addition to this, the financial advisor should have a ‘Uniform Securities Agent State License’. This refers to the Series 63 license that allows the advisor to start their own business. This license permits these professionals to conduct business across various states in the U.S. A Series 65 license is essential if the advisor is planning to charge advisory fees. The Series 65 license, also known as the ‘Uniform Investment Advisor Law Exam’ is the third essential license that an advisor should have.

    A financial advisor can get various other licenses to prove their credibility too. They can opt for certifications like CFP, ChFc, CIMA, IMCA, Series 3, Series 31, etc. Such licenses can enhance their financial knowledge and reliability. It is not a compulsion to have them, but it certainly helps. Such certifications allow you to understand the merit of these individuals. Besides this, you should also look out for the following qualities:

    • Great interpersonal skills
    • Relevant work experience
    • Impeccable business ethics
    • Knowledge of the current financial scenario
    • Farsightedness to achieve long term goals

  3. Is the financial advisor efficient?
  4. You do not want a financial planner that can be detrimental to your parent’s hard-earned money. Thus, it is vital to check the performance of the individual. This will allow you to find out their efficiency and whether you can trust them to manage your parent’s money.

    Do not forget to check the list of clients they work with. An expert financial advisor should have a sound and respectable clientele. If you get a chance, speak to any of their clients about the performance of the financial advisor. You can also ask your friends, relatives, office colleagues, etc. to strengthen your faith in their work ethic. This can help you to ascertain whether the person can carve out an apt financial plan for your parents.

  5. Can the financial advisor meet the challenges of the complex financial world?
  6. The financial world is vast, and thus, can get confusing. A financial advisor should be able to guide your parents by making efficient decisions at the right time. The advisor should be able to safeguard the financial stability of your parents, even in dreadful market conditions. In the case of investments in stocks and commodities, they should know when to enter and exit the market based on opportunities. The uncertainties of financial markets should not take a toll on their portfolio. It must also be noted that the role of the advisor does not pertain to investments only. They should also be able to help in other aspects of a financial plan. For example, they must ensure a safe retirement for your parents.

  7. Can the financial advisor plan a comprehensive financial strategy?
  8. The role of the financial advisor is to analyze their client’s current financial position. The advisor must get a complete picture of your parent’s income, savings, assets, liabilities, and expenses. After analyzing their financial position, the advisor can plan comprehensive financial strategies for different goals such as tax, retirement, etc. This must be done keeping in mind their current financial situation, risk tolerance, tax status, family situation, and other relevant financial details.

    Diversification of assets is another crucial factor to carve a winning financial strategy. This not only reduces the risk, but investment in different areas can also help safeguard long-term financial goals. A good financial advisor should have the right knowledge of optimal diversification. Investing in real estate, stocks, commodities, insurance, mutual funds, endowment policies, gold, forex, etc. can help your parents’ portfolio perform better. Here the expertise of the financial advisor can play a crucial role. So, ensure that they have enough years of experience to diversify efficiently.

Some other prerequisites

The tips mentioned above can be helpful to guide your parents to hire a suitable financial advisor. However, if you hire one on behalf of your parents, you will require a power of attorney. Without a valid power or attorney, you will not be able to take any financial decisions for them.

To sum it up

Financial advisors may not be able to predict the future. But they have professional expertise on how to manage money. With the knowledge of the right financial products and diversification of investment, they can reduce the risk of a portfolio drastically. Since not all financial advisors are competent enough, you must check their qualifications, experience, reputation, etc. before hiring them.

Ensure you choose a trustworthy, experienced, and qualified Financial Advisors for your parents.

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