This week, the United States celebrates America Saves Week (Feb. 24 – Mar. 1), a time when various financial organizations initiate efforts to teach consumers everywhere how to start taking control of their spending, begin to save more money for both short- and long-term goals and launch a debt reduction strategy.
A paucity of financial literacy is ubiquitous all across the world and in all age demographics. According to a 2013 TCF Bank poll, nearly half (49 percent) of teenagers do not have sufficient financial literacy skills. An overwhelming number of small business owners, meanwhile, face a financial aptitude gap, notes a 2013 Intuit Canada survey.
For those that never practiced financial prudency, it can be relatively simple to begin saving for the future, a rainy day or big-box purchase. Some of the easiest ways to set aside cash during this year’s America Saves Week might be offered by GoBankingRates.com:
- Set a savings goal
- Find a better savings rate
- Make a plan to pay off your debt
- Attend a community workshop or seminar
- See if your financial institution is participating
“The importance of saving cannot be over-emphasized, as saving is one of the critical building blocks to financial success,” said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC), in a statement. “Financial stability cannot exist without a healthy savings account.”
If your household maintains a healthy annual earning power but is unsure about saving money, investing in the stock market and analyzing assets, the question that must be asked is: should I hire a financial advisor? The answer really depends on the household, financial knowledge and salary.
Charles Hughes, a certified financial planner in Bayshore, N.Y., told Investopedia that clients who seek a financial advisor usually do so when they receive a large sum of money that they never had before. Others solicit the services of a financial professional when they become scared of the market and refrain from making investment choices themselves.
Essentially, what you’re looking for is a Chief Financial Officer (CFO) for your household.
To determine if you need a financial advisor, ask yourself some of these questions:
- Do I have sufficient knowledge when it comes to finances?
- Do I have fun reading and researching investments and market news?
- Do I have the time, expertise and inclination to monitor, analyze and revise my investment portfolio?
"Many people don't realize that hiring a financial planner can be a good investment," says Gerri Detweiler, radio host and author of "Slash Your Debt" in a news release. "If you find yourself letting important financial decisions go because you just don't seem to get around to them, you might want to talk to a financial planner to get those jobs done."
When it comes to hiring a financial advisor, where does one even begin?
Finding a professional, certified financial advisor isn’t difficult at all. A simple Google search can suffice, but it’s important to ensure that the individual offering financial advice has three letters after his or her name: CFP. These letters indicate that a CFP has passed a meticulous, in-depth and challenging test administered by the Certified Financial Planner Board of Standards.
It should be noted that there are other letters in the alphabet soup: ChFC, CFA, AICPA PFP, CLU, RFP, TEP and a wide variety of others. Be sure to perform your due diligence by planning ahead, seeking referrals from friends and family members and perusing the various organizations, such as the National Association of Personal Financial Advisors, Garrett Planning Network and others – Barron’s recently published its Top 1,200 Financial Advisors list.
It’s important to remember, though, that financial advisors are not stockbrokers or mutual fund salesmen. A genuine financial advisor does exactly that: offer genuine advice in regards to your personal financial situation and act in your best interests while still listening to your ideas and concerns.
In order to conclude if the person you are interviewing is the best individual for the job, it would be wise to ask a series of question. Here are some of the most commonly asked questions that should be thrown at the candidate:
- What is your background?
- What is your track record?
- Can you explain a concept to me?
- Who is managing my investments?
- How are you compensated?
Once the questions have been asked and the interview is completed, take the time to check the candidates’ qualifications, speak with their references, compare fees, understand and research their advice and interview more than one or two financial advisors. Another important aspect is to always get everything in writing.
“At the end of the day, bad tax and estate planning can make decades of good hard work and savings disappear,” said Patrick Morris, CEO of Hagin Investment Management, in an interview with U.S. News & World Report. “Any advisor you’re considering should either have some background in these issues or have attorneys, estate planners and accountants that they work with that can help you.”
Are you interested in hiring a financial advisor this year? Share your concerns, suggestions and ideas in the comment section.