Mark Hauser Offers Recommendations for Choosing a Financial Advisor – Daily Sundial | Vette Leader

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Portrait of a white man in a suitMark Hauser, Co-Managing Partner at Hauser Private Equity, provides expert advice on the selection of a financial advisor.

Achieving predetermined financial goals requires a carefully planned and executed strategy. Success requires long-term financial discipline along with the guidance of a recognized financial advisor. Aligning with the right person is key to executing a well-targeted investment plan that achieves the desired results. Private Equity Managing Director Mark Hauser says consumers should do their due diligence to ensure they choose the best candidate.

What does a financial advisor do?

Financial advisers may offer a limited or broad menu of services. Many advisors offer clients these seven core financial services. In addition, financial advisors can add targeted services for specific markets or client goals.

Debt Management Program: Over-indebted customers often lack a realistic repayment structure. A financial advisor will create a viable strategy for paying off mortgages, car loans, student loans, credit card bills, and/or other debt. The consultant should educate the client about the discipline required to achieve these challenging goals.

Insurance advice: Financial advisors often analyze a client’s existing insurance policies to locate coverage gaps that could result in potential liabilities. Depending on the client’s needs, the consultant can also recommend targeted policies such as long-term care or disability insurance. If the advisor is not a licensed insurance agent, the client must purchase the policies from an agent of their choice.

Strategic investments: When formulating (and executing) an investment strategy, a financial adviser keeps each client’s goals and risk tolerance at the forefront. Ideally, the advisor selects investments that meet these parameters. As certain investments may become less attractive over time, the adviser should reassess each client’s priorities and revise the investment program accordingly.

University funding: Customers who want to save for their children’s (or grandchildren’s) college education need a strategy to achieve this goal. A financial advisor can create a college plan that will meet this goal over time.

Retirement Plan Structure: Aspiring retirees often need help developing a strategy for financing their retirement. A financial advisor can create a plan to help retirees meet their goals and live comfortably once they retire.

Tax planning: A financial advisor can recommend legal avenues to reduce a client’s tax burden. However, many financial advisors are not tax experts. As such, Mark Hauser recommends that clients also consult with a Certified Public Accountant (or CPA) or licensed tax professional.

Execution of the estate plan: Some clients want to ensure that family members and/or charities receive the client’s estate-related benefits. A financial adviser can structure this wealth transfer to suit the client’s wishes while also complying with applicable legal and financial requirements.

Four primary types of financial advisors

Understanding the types of financial advisors will help prospective clients select the advisor who is the best overall fit. Learning how the consultant gets paid is an important first step.

Armed with this information, the client can determine whether the advice provided will help achieve their goals or simply benefit the advisor’s bank account. Private equity expert Mark Hauser says potential customers should take the time to understand this important difference.

Paid Financial Advisors

A fee-based financial advisor only receives fees from its customer service. The advisor can charge a flat rate, an hourly rate or a percentage of each client’s assets under management. Most fee-based consultants work within this model to minimize conflicts of interest.

Honorary consultants are considered trustees in this context. As such, they are legally required to act in the best interests of each client, rather than recommending investments that would benefit the advisor’s bottom line.

Commission-Based Financial Advisors

Some commission-based financial advisors make money solely from selling third-party products to clients. Other commission-based advisors charge fees while also receiving third-party sales commissions.

In any event, Financial Advisors who receive commissions are not fiduciaries. Instead, they are salespeople for insurance brokers and investment firms. In this role, they only need to meet a standard of suitability. This means that the advisor’s commission-based investments must be appropriate for each client, although they may not be the best choice for the client’s needs.

An important fiduciary distinction

However, certain financial products (like life insurance) are typically only sold on a commission basis, he points out Markus Hauser. To illustrate, a fee-based financial advisor who receives life insurance commissions may still prioritize a client’s well-being when offering other types of financial advice. When working with non-commissioned products, the consultant can continue to act as trustee.

Registered Investment Advisors

A Registered Investment Advisor (or RIA) is a firm that provides fiduciary financial services to clients. Each RIA hires a few (or many) Investment Advisor Representatives (or IARs) bound in trust. An IAR may adopt the designation “financial advisor” and use a fee-based or no-fee fee structure.

Certified Financial Planner

Certain IARs have completed the training required to become a Certified Financial Planner (or CFP). In order to receive this coveted award, the consultant usually has many years of experience in the financial services industry. Additionally, a CFP has passed difficult industry exams that include investing, insurance planning, and real estate.

Because of CFP’s extensive experience, many people with complex financial scenarios work with these recognized professionals. Private equity investor Mark Hauser confirms that Certified Financial Planners are highly respected in the financial industry.

Choosing a Financial Advisor: 5 Factors to Consider

At this time, financial advisors are not regulated by the United States government or any other central authority. In addition, there is no clearly defined “financial advisor” standard, unlike a doctor’s or lawyer’s license. For these reasons, Mark Hauser explains that prospective clients should do their due diligence when selecting a financial advisor to help them achieve their goals.

Check the consultant’s professional qualifications

Prospective clients should always verify a financial advisor’s professional qualifications before committing to work with them. Confirm a Certificates from the certified financial planner via the CFP Board website. However, as with any recognized advisor, official designation does not necessarily mean that the advisor is always acting in the client’s best interests.

Determine the consultant’s compensation method

As previously mentioned, a fee-based financial advisor only receives compensation from its clients, not product sales commissions. Therefore, this financial advisor is considered a fiduciary acting in the best interests of each client.

In contrast, a commission-based financial advisor benefits from its recommended product offerings to clients. Prospective clients should ensure they understand each financial advisor’s method of remuneration.

Look for an empathetic, focused advisor

Ideally, a financial advisor understands each client’s goals on a personal level and expresses that understanding and support. Despite market fluctuations and other external events, the consultant will keep his client focused on his overarching goals.

Find an education-oriented professional

Ideally, every financial advisor invests regularly in their further education. In particular, the advisor should receive ongoing training in complex areas such as tax issues affecting pensions. The complicated 401(k) and Individual Retirement Account (or IRA) laws also change frequently, and advisors should stay current on what they know.

Demand respect and clarity

A reputable financial adviser should readily answer a client’s questions without making them feel unintelligent or uneducated. The Advisor should not charge inexplicable fees, only offer products that benefit them directly, or conduct business without client authorization. Customers who feel patronized or who do not receive clear answers to their questions should immediately seek another advisor.

Two alternative financial advice options

Financial advisors typically work with clients who have a stable income and are able to invest a significant portion of those funds. With that in mind, potential investors who don’t quite meet this requirement have two viable financial advice options.

NAPFA Registered Financial Advisor

The National Association of Personal Financial Advisors (or NAPFA) maintains a directory of NAPFA-registered financial advisors. These fee-only professionals do not market financial products, which allows them to maintain their objectivity.

Each NAPFA-registered financial advisor has met strict competency standards. In addition, these advisors are trustees who take into account the full financial picture of each client when making financial decisions. Learn more and find one NAPFA Registered Financial Advisor via the club’s website.

Robo Advisor Platforms

Budget-conscious investors can consider investing through a robo-advisor service. These digital platforms conduct online surveys on each client’s goals and financial situation.

Based on the survey results, the robo-advisor uses an algorithm to select and implement an investment strategy. Robo advisor customers benefit from security improvements, customer education, and low account and transaction fees.

Investors may consider using a robo-advisor to help achieve longer-term goals like retirement planning. In addition to the standard automated investment offerings, many robo-advisors offer a la carte financial planning services.

Re-evaluating priorities is key

A client’s financial situation often changes over time. Business success or career success may bring additional financial resources into play. In contrast, a job loss or an economic downturn may mean that the client needs to reconsider their investment priorities. Mark Hauser emphasizes that it is a reputable financial advisor provides guidance that enables each client to make the decision that best suits their desired goals.

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