Choosing an Investment Advisor
- Determining Need
- Type of Investment Adviser
- Get Referrals
- Check Credentials
- Find Several Advisors
Do you find yourself with a little extra cash and looking for an investment advisor to help you invest your money? The good news is that there are plenty of investment advisers and financial planners are able to help you make some money. Whether you ask around your neighbor or use Google search, you’re sure to find many investment advisors. The key is finding the right investment or financial advisor. Here are 5 tips to help choose investment advisors.
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Determining Need
The first concern for potential investors is if they even need a financial advisor. Although the idea of investing money to make more money is an appealing thought, not everyone is financially stable enough to do so. If you live from payday to payday, investing excess money may not be wise because there’s not much money to invest. Investment advisors are generally not going to be interested in representing a client who can’t afford to invest. They are in the business to make money, too. A good rule of thumb is that if are able to save at least 20% of your yearly income, you’re a good candidate for investing.
Type of Investment Adviser
In the financial world, there are:
- financial planners
- financial advisors
- investment advisers
Once you’re ready and able to invest money regularly, the next step is determining the type of adviser needed. Financial advisors typically fall in the category of either suitability standard advisors or fiduciary standard advisers. Both will make investments that benefit the client. But the suitability standard advisor is not bound by law to make investments that are in you’re best interest. Their goal is to make the client money. But they can make investment choices based on what will also make them money. Choosing a fiducial advisor is guaranteeing that the advisor will make decisions that are in the client’s best interest.
Get Referrals
As with any individual you hire, it’s important to get referrals. Just Googling the advisor to see what they offer is not enough. Every investment adviser is going to claim they’re the best and that they’ll make the client money. Googling investment advisers or pulling their names out of the phone book will provide you with many names, but this will not necessarily give a list of those that are preferred. Word of mouth is a great source of referral. Potential investors should speak with family and friends to see who they use and if they’re satisfied with the services providing. Google also offers various websites that provide reviews on investment advisors. Clients should do as much research as possible and get as many good referrals as possible. The investment adviser may even be willing to provide the client with referrals.
Check Credentials
Researching and checking referrals on different investment advisers is a great first step towards choosing and investment adviser, but it’s still important to check the credentials of any investment advisors clients may be considering. Two places worth checking out are BrokerCheck and Investment Adviser Public Disclosure. They’re excellent sites to get information on potential investment advisers, including their background and the type of experience each adviser has in the business. If investment advisors have been disciplined, you can find this information by going to the website of the Certified Financial Planner for that specific state.
Find Several Advisors
It’s important to not select the first financial adviser that comes up in a Google search regardless of how good the individual may seem. They’re not going to publish negative information, so they’re all going to look good. It’s important to find several different investment advisors, and research each one individually. By comparing each advisor, you are armed with the best possible information so you can make an informed decision.
Concluding Thoughts
The U.S. News & World Report states that investors and consumers will never have difficulty finding an investment adviser. What is the difficult part is finding the right investment advisor – the one that best meets a client’s needs so they can both begin making some good money!
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