| A good investment advisor can make financial | | | | uniform credentials for financial services |
| decision making a hassle-free experience-and help | | | | professionals, experience counts. In addition to |
| you develop the peace-of-mind to sleep well at | | | | experience, professional designations are often a |
| night regardless of what happened in the stock | | | | good sign that the advisor takes his or her career |
| market during the day. Since investment advice | | | | seriously. |
| comes in many flavors, the challenge is to find the | | | | Have you ever been disciplined by any |
| one that is right for you. | | | | government regulator for unethical or improper |
| The Trouble With Titles | | | | conduct? Although disciplinary action does not |
| Do you need a broker, a financial planner, or an | | | | necessarily mean that this advisor will steer you |
| investment advisor? While these titles are often | | | | wrong, there are just too many honest advisors |
| used interchangeably, the services provided by | | | | out there to risk your money by taking |
| each of these professionals are often quite | | | | unnecessary chances. Ask to see a copy of the |
| different. Brokers' help investors buy and sell | | | | advisor's "Form ADV" before you invest. The |
| securities. Financial planners help investors prepare | | | | ADV will show you whether the advisor has been |
| strategies for specific goals, such as retirement, | | | | disciplined. |
| and investment advisors provide advice for a fee. | | | | Whom do you work for? An increasing number of |
| Of course, it is a bit more complicated than it first | | | | investors are making the decision to invest with |
| appears. Many of the investment professionals | | | | independent advisors-that is, advisors who do not |
| who you might think of as brokers are actually | | | | work for a big company, but instead founded |
| financial planners, just as some planners are | | | | their own small businesses. Independent |
| actually brokers in disguise. To further complicate | | | | professionals are not constrained by the need to |
| matters, most investment advisors are also | | | | support corporate business decisions, so they |
| financial planners, but only some financial planners | | | | often have access to a much broader array of |
| are investment advisors. Investment advisors, of | | | | investment options than can be found at a big |
| course, are available in numerous makes and | | | | brokerage firm. Furthermore, because |
| models-some provide advice on just a single topic, | | | | independent shops don't have the name |
| such as tax-aware investing, while others offer | | | | recognition and marketing muscle of a national |
| complete financial planning services. Confused yet? | | | | brokerage, odds are that they have to provide |
| It's a Lot Simpler Than it Seems | | | | good service if they want to develop a solid |
| Forget the titles and their definitions for a minute | | | | reputation in the community and stay in business |
| and think about what it is that you want from a | | | | for any length of time. |
| financial services professional. To find someone | | | | How are you paid? For investment professionals, |
| who can help guide your investment decisions, | | | | compensation can come in many forms. Common |
| begin the search with a strict focus on your | | | | compensation methods include: Fee: Fee-based |
| needs. Are you seeking advice about a single topic | | | | advisors either charge a percentage based on the |
| such as buying or selling a security? Are you | | | | value of the assets they manage for you, an |
| planning your estate, planning for retirement or | | | | hourly consulting fee or a fixed fee. Commission: |
| purchasing insurance? Are you in a high-tax | | | | Commission-based advisors earn a commission on |
| bracket and looking to minimize the impact of | | | | securities they sell. Fee and Commission: Fee and |
| taxes on your portfolio? Do you need guidance in | | | | commission-based advisors receive a combination |
| creating a financial plan that encompasses all of | | | | of fees and commission for their services. Before |
| these issues and more? Once you have a good | | | | you sign any papers, ask your advisor how he or |
| idea of the types of services you need, you will | | | | she is compensated and how that method of |
| be much better prepared to find an advisor who | | | | compensation benefits investors. |
| offers those services. If you are not exactly sure | | | | The Bottom Line |
| what you need, find an advisor who offers a | | | | Selecting a good advisor is not difficult; it just |
| full-range of services and let the advisor help you | | | | requires a little thought and patience. The right |
| review your situation. | | | | financial advisor can help you make investment |
| Ask the Right Questions | | | | decisions that have a lasting and meaningful |
| Once you have found an investment professional | | | | impact on your life. Therefore, before you rush |
| that can meet your needs, be sure to ask the | | | | out and make an investment, take the time to |
| following questions before you invest: | | | | choose your advisor carefully-after all, it is your |
| What are your qualifications? While there are no | | | | money and your future. |