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Decisions, Decisions: Choosing an Investment Advisor

Deciding to invest your money is a good financial move, but how and where should you invest it? Websites like Mark Matson Reviews cannot state it clearly enough that all types of investment involves risk—are you willing to lose money? Will you be willing to put up with other costs associated with an investment? If you answer to both of these questions is a definite yes, then it’s time to invest!

Choosing a professional to help you grow your money can be tricky, but it’s a necessary and important step to take so you can be sure to make the best investment decisions, especially when it concerns your financial security in the long term. Registered Investment Advisors or RIAs are financial fiduciaries as well, meaning they are legally authorized to hold assets in trust. As such, they follow the highest ethical standards in the industry, and should put your best interests first.

Choose an advisor who is ethical, competent, has a good track record, and has expertise in what you plan to do. Verify that the advisor or the firm he or she belongs to is duly registered with the Securities and Exchange Commission and the Financial Industry Regulatory Authority. You can also take note of these four aspects:

  • Ethics – licensing, fiduciary status, registration, compliance record, and criminal record, if any. If the advisor lost his or her license in the past, determine why—if the advisor had difficulty managing his or her own license, what would it mean if you leave him or her in charge of your money?
  • Services – money management, legal advice, planning, insurance advice, investment advice, tax advice. Advisors have their own niche of expertise; if you’re planning to invest, then an advisor who is well-versed and experienced in bonds, exchange-traded funds, stocks, and mutual funds is the one to choose.
  • Business practices – expenses, ongoing services, track record, compensation methods, report types. Looking at a potential advisor’s track record is a good way to help you evaluate performance, and knowing how they charge for services can give you an idea whether they make money from selling a specific financial product.
  • Credentials – education, experience, employment history, association memberships, certifications. Take note that graduating from a ‘top’ school does not necessarily mean the advisor has an excellent performance. In the same light, a community college grad can nonetheless be a great advisor if he or she has had the necessary experience and know-how of the financial industry.

Investor beware
Choose your investment advisor well to avoid those who are more concerned about selling financial products disguised as advice. There are advisors who are good at manipulating investors into getting high-cost products with unnecessary risks, and you could lose a sizable amount for no reason. You should be wary of advisors who recommend investments that may generate extra money for them in commissions.

Ask away
When meeting with a potential advisor, don’t be ashamed to ask about their fiduciary status, their credentials, their investment approach and philosophy, and how their firm’s strengths could help you. You can even ask to see a sample financial plan to see if their method will work for you. If there is something that is unclear to you, have the advisor explain in terms you can understand. It is important that you and your advisor are on the same page, and that your interests are always the top priority.