Learn about the various FAs out there and the services they offer.
The best financial advisors take the time to learn about their clients’ unique situations and priorities before making recommendations about investments or different approaches.
The term “financial advisor” (FA) can have different connotations depending on who you ask. A financial advisor can be a registered insurance agent, an investment banker, or an accredited expert in tax minimization and estate preparation.
We can confidently say that each of the aforementioned observations is correct. In fact, many distinct categories of FAs exist, each providing a unique set of expertise. More importantly, you want to be able to pick someone trustworthy and have conviction in, regardless of the form of FA you engage in.
Your financial advisor
FA from the insurance industry
Insurance company FAs are very common and easily recognizable. These FAs typically work solely for one insurance company and are only authorized to sell that company’s products. Tied agents are also known as financial planners or insurance agents.
Independent Agent
Similar to the aforementioned professionals, IFAs may also offer guidance on the many life insurance options available from various companies. They are not limited to a single provider but rather have access to products from numerous banks, asset managers, and insurance firms. Investment products such as unit trusts and retirement planning services are two other areas in which IFAs may provide guidance. An IFA may be the way to go if you value having access to a wide variety of products.
Bank RMs, or relationship managers, FAs, sometimes known as RMs, are employed by several financial institutions. They are in charge of overseeing and developing the bank’s connections with its clientele.
In general, an RM’s responsibilities include:
Spending time with customers to learn about their financial situation and goals.
- Understanding of and putting into action economical plans geared toward such requirements and objectives
- Advising customers on the best financial services to meet their needs
- Relationship management, includes fielding questions and addressing problems from customers
- Offering periodic account and investment updates to clients
The RM can give you the sense that you need a six-figure payment before he or she will even speak to you. This, however, is no longer true.
Recent customers of a bank may have noticed that employees routinely approach them while they wait in line. These RMs typically have a broader selection of goods they may advise on, such as savings accounts, mortgage loans, insurance, and investments.
Online Resources
Online platforms that offer specialized financial planning services like insurance and investment planning have exploded in popularity in recent years. You’ll need a basic understanding of finance and the items you’re evaluating before using these sites.
Some people may still prefer personal interaction and the certainty that they can reach out to a customer service agent whenever they need to, despite the fact that there are benefits to employing software for financial guidance, such as possibly feeling less pressure to purchase things. Some of these digital hubs provide hybrid services, which bring together algorithm-directed portfolio management with human-to-human communication tools.
Choose a Financial Advisor
Before settling on an FA, it is crucial to perform some background reading.
Here are six points to think about:
1. How much financial guidance is required
Because of these differences in financial knowledge, people will require different types of guidance.
Do you have a financial strategy in place and only need access to some tools? Do you lack confidence in your ability to organize your finances or know where to begin? Answering these questions can help you zero in on the specific form of FA from the list above that is best suited to your needs.
2. Evidence of competence and success
When you first meet with your financial advisor for the first time, be sure to ask them about their background and experience. If you do, you’ll have a better idea of whether or not they have the experience and credentials to guide you toward your financial objectives.
3. Variety of offered solutions
Do your research to find out which financial institutions provide this kind of advisory service and/or tools if you’re interested in a more comprehensive suite of financial instruments.
Find an FA who specializes in the services you require and the products you intend to purchase. Budgeting, savings, insurance, investments, and retirement preparation are only a few of the pillars of a solid financial strategy.
4. Trust
You should only work with a trusted FA because of the sensitive nature of the information you will be sharing with them. Trustworthy FAs have extensive financial knowledge but also a high moral standard, the capacity for empathy, and the ability to explain intricate financial concepts in plain English.
To find the right FA, it’s important to do some homework and consult with potential candidates. The help and advice they give you should make you feel safe and secure.
5. How an FA gets paid
There are typically three forms of compensation for FAs. A financial advisor may be compensated by a combination of salary, commission from the sale of insurance or investment products, and client fees. Some of them may additionally receive a base income plus commission on top of that.
Financial advisors owe it to their clients to be up front about how they get paid so you can be sure they are acting in your best interests.
6. Required Service Depth
Are you in need of a financial advisor that will work with you to create a personalized plan that takes into account your changing needs and goals? Are you also seeking direct access to the financial products you seek? Do you prefer to make financial decisions with the click of a mouse or do you need the personal touch of a phone call or in-person meeting?
You should have a better sense of what to look for in an FA now that you’ve read this.
Getting ready to meet your FA
Most likely, your initial appointment with your FA will consist of a casual “get to know you” chat. Think about what you hope to accomplish and what you need financially before we meet. The following are some questions to ponder:
- Is your income secure in the case of an accident or illness?
- Is there enough money in the bank to take care of your loved ones in the event of your untimely demise?
- How much do you hope to put away this year for your kids’ college fund?
- Asking, “Is your money doing its job for you?” Where do you stand in terms of risk?
- When you retire, what do you want to do?
- Do you have a solid estate plan in place?
You can come prepared to the meeting with some thoughts on how to answer these questions or any other questions you may have for your FA.
Process of Financial Counseling
Financial advisors (FAs) in Singapore are obligated to first conduct a Financial Needs Analysis (FNA) with their clients. You’ll be asked a series of questions designed to help assess your current financial standing and reveal any potential gaps.
Information such as your financial goals, job status, liabilities, assets, insurance policies, and investment portfolio may be sensitive. For the FNA to be of any use, it is crucial that you be as forthright and honest as possible. Using a digital advice service, on the other hand, may reduce the amount of detail required from your end.
Your FA may provide you with suggestions right away, or they may take some time to research the issue and get back to you with a more thorough answer. Take the following into account before making any purchases:
- How well does the FA demonstrate the potential influence of your financial decisions on your entire financial plan by creating a comprehensive personal balance sheet?
- Make sure your financial demands are being met by the suggestions made (and if not, why not?).
- You should know if your long-term financial commitment to a product purchase is manageable.
- When do I have the option to return something, if necessary?
- How much do the products cost, and what other expenses apply? Is there anything more reasonable that we could try.
- Is your investment secure, and are you assured a return on your money?
Nothing must be purchased or signed right away. Spend some time doing research to find other products that are comparable and evaluate them. Get input from loved ones before making a purchase.
You should know that there is no pressure to buy anything. Keep your eye on the prize and only spend or invest in things that will help you reach that objective.
What Should You Do Next?
You have taken a significant step toward realizing your financial goals; congratulations! After considering the suggestions and buying the required items, it would be helpful to file away all the information for later use.
Keep in mind that your current financial status is reflected in the FNA. You should check in with your FA at least once a year to go over your investments. When major changes occur in your life, like getting married or having children, switching jobs, or approaching retirement age, it’s a good idea to reevaluate your protection requirements.
Keep in mind that fixing your financial woes should be part of a longer-term strategy. That’s why it’s crucial to choose a reliable FA who can be there for you every step of the way and help you reach your financial goals.