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Finding the best Investment Advisor for you -- or even deciding whether you need one at all -- can be confusing for many people. Here are 5 tips that can help you decide if an Investment Advisor is a good choice for you -- and if so, which Advisor is best for you.
(1) Do I need an Investment Advisor?
The first question you might want to ask yourself when seeking out an Investment Advisor is: Do I really need an Investment Advisor (sometimes referred to as a Financial Advisor)?
The answer depends on several factors.
If you are not comfortable managing your own money – or you just don’t have the time, interest and expertise, hiring a trusted advisor can make a lot of financial sense.
An investment advisor can not only help you manage your assets in a way that help you reach your financial goals, they can also help with things like:
(2) Does my Investment Advisor have any conflicts of interest?
A conflict of interest is an interest that might incline an investment adviser—consciously or unconsciously—to make a recommendation or render advice that is influenced by personal gain.
All Registered Investment Advisors are required to disclosure their conflicts of interests in what is called a “Brochure”. They are required to provide this Brochure to all their new clients and when there are significant updates to the firm’s policies. You should review this brochure carefully for disclosures regarding conflicts of interest.
Some examples of potential conflicts of interest:
(3) What kind of experience does the Investment Advisor have?
(4) What kind of services are provided by your Investment Advisor?
These are some of the services that may be provided by an Investment Advisor. They may be charged separately – or may be included as part of a single comprehensive fee.
(5) What are the fees charged by the Investment Advisor and how are they paid?
When looking to hire an Investment Advisor, look carefully at their Brochure and their Contract so that you understand how they make money.
Most advisors either charge a flat fee or a percentage of assets to manage your money. The % of assets can range from 0.2% to 2%. The more custom and personalized the management of the assets, the higher the fee tends to be.
Depending on the Advisor, separate fees may be charged for financial planning work. In addition, look carefully to see whether the Advisor earns additional fees from selling insurance, annuities, and Broker-Dealer kickbacks.
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