How To Choose The Right Financial Planner

How To Choose The Right Financial Planner

If you are looking for financial tips, you can find a near infinite amount of them on the internet via financial related social media groups and forums. But keep in mind that not everyone giving you such tips will be a professional with a background in finance (or even know what they’re talking about).

Actual financial advisors are people or companies that are approved by Bank Negara Malaysia (BNM), under the Financial Services Act 2013 (FSA), to carry out financial advisory business, analyse financial planning needs relating to an insurance product, and recommend or arrange a contract in respect of banking products and services. 

These people are expected to represent clients’ interest, by providing independent advice and recommendations through multiple product providers. Even then, there are quite a few of them to choose from. When seeking the services of a financial advisor, one must ensure that they pick the one that best fits their financial needs, goals, and personality.

Here are a few things to consider:

Make a list

Don’t just pick a financial planner as you go about researching. Start by first listing out what your priorities are. 

  • What is it you want to accomplish? 
  • Do you need help with investments?
  • Are you budgeting for your children’s future?
  • Is there a specific financial goal you wish to achieve?

Once you know what your goals are, you can match it with the best financial advisor for the job.

After that, you can start making a list of financial planners and advisors that might fit your criteria. By doing this, you make it much easier to organise your thoughts and research. You can also try asking family and friends if they have engaged with any of the financial advisors on the list. Their past experiences can help give you an idea of what to expect from them.

Also, you should take the time to check if a planner on your list has the required licence from Securities Commission Malaysia’s database. This can be found here. Once you have a decent list, you can start calling each financial planner to arrange for a meeting to learn more.

Find out your planner’s communication style

If you are going to hire a financial planner, then you are going to have to be comfortable talking to them. A financial planner is not someone you can simply hire and then forget about. Communication is key. A good financial planner must understand your situation and show an interest in getting to know you, your spending and saving habits, and will respect your decision-making process.

There are dozens upon dozens of communication styles out there. Your financial advisor could be action-oriented, focusing on moving forwards quickly. Or maybe they prefer looking at things from multiple perspectives, engaging with you in debates regarding the best course of action. They could even be more people-oriented, being mindful of your feelings and building strong partnerships with you. The best course of action is to choose a financial advisor that is compatible with you.

Evaluate your planner’s team

Financial planners usually come in two flavours. Those that work alone, or those with a team behind them. Apart from research into the financial planner’s background, you should also do a little digging into the credentials of their team as well.

As finance is a very broad topic, a good financial planner usually specialises in a particular field and works with another financial planner or other professionals (such as lawyers and accountants) to handle other parts of the planning and solution implementation. After all, there is only so much one person can do. A team of financial planners means that you can gather experience and expertise from a diverse background.

Understand how financial planners get paid

Generally speaking, you can expect to see three different kinds of payment structures when you engage with a financial planner. These include:

  • Commission
  • Fee-based
  • Fee-only

In Malaysia, we usually see commission only and fee-based planners. Fee only financial planners are much rarer. Financial planners that receive commission only works great with someone that wants a product that they already have some idea in mind. This kind of relationship is for the most part transactional in nature.

Fee-based financial planners earn their fee for developing a financial plan for their clients. They also tend to earn a commission if you require them to service your insurance policies or investment portfolios. You will also need to make sure that your financial planner is being transparent with you regarding fees and payments.

Just like any other major purchases, it is important to do your homework. Not all financial planners are made equal. Some will have better levels of training, while others may have a better range of services. It is important to talk to several financial planners and choose someone that best meets your current and future needs.

Read More: How To Be Your Own Financial Planner

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