A good wealth advisor is an excellent advantage to building wealth. He gives the best advice about saving, investing and growing your wealth. With quality financial advisory services, you can quickly get out of debt, optimally manage your income, and achieve your financial goals.

However, a bad financial advisory service can spell doom for your finances. Instead of growing your wealth, it can shortchange it. And all you may have to show for it is just a ton of hefty charges that will not seem to be of any reward.

Consequently, you should do a thorough evaluation of your wealth advisor at least once a year. To do this, you need to have a comprehensive outline of certain essential factors in assessing them. A standard checklist should include their fees and transparency, whether they are fiduciary or not, points of conflicts of interests, and their background.

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What Are Your Charges? How Transparent Are They?

First, you deserve to know what you are paying, why you are paying what you are paying, and the services you are paying for. Are their charges based on an annual percentage fee which varies with the assets they manage? Also, how transparent are their fees?

Financial advisors who are paid by mutual funds, insurance companies, and similar financial institutions may not be able to give you neutral advice. Hence, it may be wise to avoid them. Also, has your wealth advisor been acting as a fiduciary? Wealth advisors who are fiduciaries act only in the best interests of their clients and the only fees they take are the ones from them.

What Are The Specific Services You Are Charged For?

Moreover, you should have a precise knowledge of the specific services your wealth advisor should be giving. After you do, you should assess if they have been providing them. However, usually, the services you can access depend on the value of the investments you have with your advisor. Often, the more your investments, the more services you can access.

What Is Their Background? Are They Certified?

The background of your wealth advisor can also enable you to determine if they are good enough. Have they ever been convicted of a crime? What is their level of experience and expertise? You can quickly check the background of your wealth advisor using any of the free tools provided by financial regulatory authorities such as the Financial Industry Regulatory Authority (FINRA). BrokerCheck is useful for this.

How Useful Are Their Recommendations?

Also, if you want to confirm if your wealth advisor is good enough, check the timeliness and credibility of their recommendations. You should verify if their advice is often at the front edge. How have their recommendations impacted your portfolio? The effectiveness of the advice of a wealth advisor is essential in evaluating their professionalism.

Research For Possible Conflicts of Interest And Their Fiduciary Status

Importantly, if your wealth advisor also works as an asset manager, for a mutual fund or an insurance company, or as a representative of any similar financial institution, you may consider stopping using their services. The primary reason is that there will be a conflict of interests and they won’t be able to give advice that will be solely geared towards your financial goals.

Do A Competitor Analysis

Moreover, you should compare your wealth advisor with their competitors. That is, you should do a “competitor analysis.” What does your wealth advisor charge in relation to the rest of the market or industry? What do they offer, too?

You can use this assessment checklist to evaluate your wealth advisor:

  1. Charges: How much do they charge? For what services? How transparent are those fees?
  2. Fiduciary status: Is your wealth advisor working for a mutual fund or an insurance firm? Do they protect your interests all the time or the interests of their firm?
  3. Services: What services does your wealth advisor offer? What services are they meant to offer? Are they genuinely giving you bang for your bucks?
  4. Background: What is the background of your financial advisor? What is their level of knowledge and expertise? Have they ever been convicted of a crime? Run a check on their background.
  5. Professionalism: How have their recommendations benefited your life? Have they made your portfolio better or worse?
  6. Conflicts of Interests: Does your wealth advisor collect payments from mutual funds, insurance firms, or similar institutions? If they do, their recommendations may be biased.
  7. Competitor Analysis: what do their competitors offer in comparison to them? Also, what fees do they charge in relation to the rest of the industry?

Finally, evaluating your wealth advisor shouldn’t make you feel guilty or offensive. It is an exercise you should routinely do to know if they are good. The essence is to ensure that you’re getting the best services from them.

However, a bad financial advisory service can spell doom for your finances. Instead of growing your wealth, it can shortchange it. And all you may have to show for it is just a ton of hefty charges that will not seem to be of any reward.