Investing your money can be a smarter move than simply leaving it in a savings account, and the guidance of a seasoned advisor can further ensure prosperity. Regardless of whether you’re a novice or a seasoned investor, the guidance of a trustworthy advisor can enhance your investment outcomes. Here are some pointers to assist you in selecting the best advisor.
EDUCATION AND EXPERIENCE
As much as you would be cautious in entrusting your health to someone without proper medical training or stable hands, the same skepticism should apply to entrusting your hard-earned cash with an investment advisor who doesn’t adequately understand the market. Be sure to verify the professional credibility and past experience of any potential advisor. This is achievable through reviewing their website and seeking independent reviews detailing their level of experience and educational background.
PROPER LICENSING
Once you’re satisfied with the potential advisor’s credentials and experience, an additional level of scrutiny should be applied to verify current licensing status. To qualify as Registered Investment Advisors, investment advisors must successfully pass the Series 65 exam.
Although obtaining certifications aren’t compulsory for advisors, it can boost their credibility and more importantly, your confidence in them. Certifications, such as Personal Financial Specialist, Certified Financial Planner, Chartered Financial Consultant, and Chartered Financial Analyst are examples to look at.
FEES
Before committing to an investment advisor, it’s vital to understand their payment structure. They should be transparent about how they’re compensated as this can highlight potential conflicts of interest, especially if they’re earning commissions. Common fee structures include assets under management fee, hourly fee, and flat fee. Also, inquire about any additional costs not included in the base fee to prevent unexpected financial complications.
OPT FOR A FIDUCIARY
Engaging with fiduciary advisors can protect your interests, as they are required to prioritize your needs. Non-fiduciary advisors might provide satisfactory advice, but it might not be most advantageous for your situation.
RUN A CRIMINAL BACKGROUND CHECK
As part of the due diligence process, it’s crucial to run background checks on prospective investment advisors. Even though you can ask them directly about any criminal history, a proper check will provide definitive answers. Background checks may also uncover any regulatory investigations by investment bodies or groups. Asking for existing client references can also enhance your confidence.
DEGREE OF INTERACTION
Deciding the frequency of interaction with your advisor is also crucial. Preferences can range from a once-a-year check-in to more regular updates. Sharing your investment goals with potential advisors can help establish a meeting schedule that benefits both parties. It’s also wise to set an agenda for each meeting.
