Preparing for Your Financial Future With a Financial Advisor

Ria compliance

Most Americans do not and will not have enough money to comfortably retire. Most Americans do not even have enough money saved in the event of a financial emergency. A lack of saving and investing can leave you in financial trouble if you lose your job or incur a large expense. It is important to begin preparing and saving with your first paycheck. It is also important to put money into investments and stocks to grow it at a quicker pace. A registered investment advisor can be a great resource in understanding how to invest and prepare for your financial future.

Understand what a registered investment advisor is

Before you choose an investment advisor that is right for you, you will need to understand what you are hiring them for. You will also need to understand the services that they will provide to you. An investment advisor is an individual or entity that (1) provides advice or analysis by making direct or indirect recommendations regarding securities or securities markets, (2) for compensation in any form, and (3) engages in the regular business of providing advice regarding securities.

Find an investment advisor who is right for your financial needs

There are different types of financial investment advisors. Some focus on retirement needs, while others focus on riskier investments that may not be suited for someone coming up on retirement. Some financial advisors are more used to working with high net worth investors, whereas others are more comfortable with your everyday family income. The most common definition of a high net worth investor is someone with a net worth of $1 million or more. The reason for this is that most RIA firms will establish an account minimum for anyone wishing to become a client.

Ensure that your registered investment advisor is compliant and legal

An investment firm must undergo specific audits and requirements to gain RIA compliance. This informs the investor that their chosen investment advisor is qualified, knowledgeable, and practices ethical business. According to the U.S. Securities and Exchange Commission?s (SEC) examination staff, federally registered investment advisors may be subject to an SEC examination or inspection for three main reasons, (1) routine examination or inspection, (2) because of an investor complaint, and (3) a sweep, or industry wide, examination focusing on a particular area of investment advisor compliance or risk area. The random inspections ensure that your RIA investment advisor is handling your money correctly.

Do you own research

Although you are paying your SEC investment advisers to handle your money and to put it into the best investments, you should still follow the market and stock trends. You may want to make individual decisions or you may be interested in a specific investment that your registered investment advisor is not yet aware of. Also, staying informed on investment practices and trends can help you ask the appropriate questions to your registered investment advisor.

Perhaps you considered becoming a wealth advisor after your first visit to a financial planner. Many people with a tacit interest in wealth building, investment planning, retirement planning, or cryptocurrency investing, find themselves interested in the topic enough to consider studying it. Many avenues exist for this though. Some might consider earning an investment banking license while others might go the financial planner route. Still, others might decide the work of a certified public accountant appeals to them, especially if they develop an interest in forensic accounting. Many areas exist and the one you choose determines the amount of time you devote to schooling and the number of certifications you must earn.

Are all certified financial planners fiduciaries?

As of 2019, yes. In October of that year, the Certified Financial Planner Board of Standards, Inc. began requiring all certified financial planners (CFPs) and brokers to meet the fiduciary standard. This does add a little extra studying and certification to the process of becoming a CFP, but it is not necessary for a CPA. Both certifications do require annual continuing education requirements.

Now that you’re considering becoming a CFP, can you imagine that you once asked yourself, “Are wealth management firms worth it?” Now, you know they are. If you just discovered this article though, and you need to find the right firm to help you get started on your wealth-building, read on to learn about finding a registered investment advisor, checking an advisor’s credentials, and how to conduct an advisory fees comparison among the potential advisors.

Or, if you find that becoming a certified financial planner is a bit too much research, you can always find a registered wealth management or investment advisor to work with you on your financial journey.

Regularly monitor your funds

Simply handing your funds to a third party risk management company or registered investment advisor is not enough. The more diverse that your funds are, the better chance that you have to make money off of investments. If your investment advisor is constantly losing you money in the same types of stocks, never moving them, you want to be aware of this. Even when you allow a registered investment advisor to handle your investments, you should always be aware of where your money is and where it is going. This is the best way to protect your financial future.

Most Americans fail to plan for their futures. This includes failing to prepare for any type of financial emergency. People do not understand the stock market or how to invest, so they simply do not do it. Utilizing the services of a registered investment advisor can ensure that you are putting your money into the best types of investments for your financial needs. However, great care and consideration should go into choosing your financial advisor and you should always understand where your money is going.

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