| There is a reason most of us depend on our | | | | of investments that pay a large upfront fee to |
| friends or ourselves for making important | | | | the investment advisor or lock you into |
| investment decisions. It is hard to find a | | | | investments that levy a withdrawal penalty. |
| dependable professional source of investment | | | | Check credentials and references |
| advice. There is no dearth of places to turn to for | | | | It is important to check references and |
| investment advice, but the decision to put a | | | | credentials. For example in the US ask for 'Form |
| portion of your financial future in someone else's | | | | ADV' for the advisors, which provides you with |
| hands should be made very carefully after | | | | the advisors background, services offered, mode |
| collecting sufficient information. | | | | of payment and strategies used. Form is |
| What are the different types of financial and | | | | obtainable from the advisors, the SEC, state |
| investment advisors? | | | | security regulator or those advisors managing $25 |
| - Investment advisor is a professional firm or an | | | | million or more in client assets. Also inquire about |
| individual that advises clients on investment | | | | the advisors educational and professional |
| matters. They may manage trust funds, pension | | | | background. |
| funds and personal investments like stocks and | | | | Know how to evaluate your advisors |
| mutual funds on their customer's behalf. | | | | Once you have hired an investment advisor, |
| - Financial planners offer investment advice and | | | | remember to evaluate his or her performance at |
| help clients with savings, taxes, insurance, estate | | | | regular interval. It is also important to meet with |
| planning and retirement. | | | | them regularly to review short and long term |
| - Brokers buy or sell stocks, mutual funds, bonds | | | | goals and to adjust your investment portfolio. |
| on their customer's behalf. | | | | Apply the following standards for evaluation. |
| How do I pick a good investment advisor? | | | | - Review performance: Check regularly how your |
| Ask your friends and family if they know a good | | | | money is doing in the investments advocated by |
| investment advisor. Also compare price quotes | | | | your advisor. Evaluate portfolio performance with |
| from multiple qualified investment advisors listed | | | | regard to investment goal and risk tolerance for |
| on B2B marketplaces and ask them for an | | | | invested assets. Use a proper benchmark or |
| appointment. | | | | metric matching your investment strategy for |
| Interview your financial advisor extensively, | | | | various assets. For example if you have invested |
| judging their professionalism and experience. Let | | | | in stocks, use the market index as the |
| him or her learn about your tax situation, fiscal | | | | benchmark for comparison. |
| health and long term goals. | | | | - Cost-benefit ratio: Though your money maybe |
| Ask the following questions to narrow your | | | | doing well, it is important to ascertain the ratio of |
| search for an investment advisor. | | | | investment return delivered by your advisor to his |
| - What experience do you have? | | | | or her earnings. Are you paying more than you |
| - Where are you registered? | | | | thought for the investment return? |
| - What investment services do you extend? | | | | - Quality of investment recommendations: |
| - Do you have all the required licenses. | | | | Evaluate and test your advisors knowledge of the |
| - How much money do you manage for other | | | | latest investment approaches, preparedness to |
| clients? | | | | stay above the rest in the changing market and |
| - How have your investments performed in the | | | | insights or suggestions on new investment |
| past one to ten years? | | | | strategies. |
| - How will you assist me with my investments? | | | | - Working relationship: Your investment advisor |
| - How are you paid? | | | | should regularly communicate and update you |
| - Do you require a minimum investment? | | | | about your investments. |
| - How are you different from other investment | | | | - Personalized service: advisor should regularly |
| or financial advisors? | | | | review your investment goals and preferences |
| Learn how your advisor gains from you | | | | and tailor the investments accordingly. You should |
| Investment advisors are paid either a percent of | | | | be wary of investment advisors who show too |
| the asset value they handle for a customer, a | | | | much reliance on software programs to create |
| fixed or hourly fee, or a combination of all. They | | | | your portfolio. Hiring a good investment advisor is |
| have a fiduciary responsibility to act in your best | | | | important to secure your financial future. Hire |
| interest while making investment decisions on | | | | someone you can trust and can easily |
| your behalf. It is best to at least partially | | | | communicate with. If you advisor does not |
| compensate the investment advisor based on his | | | | perform as expected, set up a meeting to rectify |
| or her performance. In such an arrangement, the | | | | the situation else find someone who could be |
| investment advisor makes a commission only if | | | | more helpful. |
| he or she meets your investment goals. Be wary | | | | |