En español | The latest stock market volatility has a lot of people seeking assistance in managing their money. If you're working with a financial adviser — or were thinking about hiring one — you may be wondering if it's worth it to have professional help in planning your financial future.
See also: How to check out your investment broker.
The decision to retain a money-management pro shouldn't be taken lightly. And it shouldn't cost you an arm and a leg either.
Here's how to get the most out of your financial adviser, and make sure you get your money's worth, too.
Recognize the Differences Between Advisers
Based on how they are paid, financial advisers are generally classified in three ways: as fee-only planners, fee-based advisers or commission-based advisers.
With fee-only planners, there is no conflict of interest because the adviser will charge either an hourly fee or a flat annual fee based on a percentage of your assets he or she is managing. In the latter case, when you make money, so does the adviser. Likewise, if you lose money, so does the adviser. In this way, your goals are aligned.
With fee-based planners, there is some potential for a conflict of interest. If you use a fee-based planner, you will generally receive a written financial plan or report on which a fee is charged, theoretically for an objective analysis of your situation. Frequently, however, the plan will recommend that you purchase a commissionable product, like life insurance, annuities or mutual funds.