Having an independent financial adviser is a very convenient way to handle personal finance issues easily; therefore, you will find tons of articles about the advantages of hiring a financial adviser, and various online tips on how to find one. Although the idea of having someone to advise you on issues you don’t have the time to research on your own is very nice, the fact that these people share their expertise seemingly for free is rather disturbing. This article should shed some light on how a financial adviser can help you and what should you pay attention to when dealing with one.

The Pros of teaming up with a financial adviser

The complexity of modern day personal finance is overwhelming, with hundreds of options to consider for spending, saving and investing. Many banks, insurance companies, mortgage companies, investment funds, etc. compete to bring clients the best deals and they advertise it very openly. Frankly, do you need advice on where to insure your car if some big insurance company openly claims that it will give you the best conditions? Sure it will, as every other insurer on the market… So how to decide when you don’t have the time to spend endless hours trying to decipher the conditions of every financial service written on several pages of small print? Ask somebody you trust, somebody who knows you and wishes you the best, and has the experience you’re looking for. Preferably, a certified financial adviser.

Where should you look for a financial adviser

If you don’t happen to have a friend who is a certified adviser, don’t worry, just ask your friends. If they are happy with the services of their adviser, they will recommend him. Just keep in mind that many advisers pay their clients for recommendations. This doesn’t mean they bribe your friends into recommending, because they wouldn’t do it either way if the adviser hasn’t saved them time and money in the first place. Just remember good services advertise themselves and don’t need money, so be cautious.

How exactly does a financial adviser help you?

OK, so after you called your new financial adviser and agreed on a first meeting, he will try to assess your financial health and possibilities or threats, in the same way your doctor examines your health conditions. He or she should go through your current contracts to identify likely future problems. He will then try to understand your needs, lifestyle, goals and ideals to be able to recommend products that can be of benefit to you. Many life situations are an opportunity to call your adviser and talk about the financial aspects of e.g. marriage, divorce, birth of a baby, savings for college, job change, inheritance etc. A good financial adviser will think about your future even if you do not, and help you come up with a good retirement plan, plans how to ensure that your loved ones are taken care of and will even minimize your taxes!

Does a financial adviser help you for free?

So how will you pay this person for his time and expertise if he or she fills out all the required documents of, let’s say a mortgage loan application, ensures that everything goes smooth and saves you hundreds of dollars on solicitor fees and doesn’t want any cash for it? Independent financial advisers receive a referral fee from the financial institution with which you sign a deal. This commission rate is their pay for recommending the institution to you and does not make your deal worse; on the contrary, most advisers get better conditions for their clients that are normally given by the institution without the adviser’s involvement. The relationship between you and your adviser is therefore mutually profitable.

The Cons of having a financial adviser

The biggest con of listening to your adviser is often hidden in the offered financial solution itself. The range of products may be limited to those institutions that offer the biggest commission fees, so you likely won’t get the best deal on the market, though you will probably get a pretty good one. Maybe better one than you would get on your own without extensive research. Maybe not. Always think about what is a financial adviser’s role and do your own decision-making, also because financial advisers tend to patronize.

Always remember that a financial adviser can only be successful if he has a long history of satisfied clients, which is a proof that he is reliable and experienced. So choose carefully, as a good adviser can save you many troubles, while an inexperienced one may mislead you.

Author is expert on Canadian life insurance companies and experienced financial adviser.