5 Tips for Finding the Best Investment Advisor for You

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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. 

• How comfortable am I managing my own money?
• How knowledgeable am I about investing in various asset classes like stocks, bonds and options?
• Do I have the time and interest to devote to managing my money?
• Am I comfortable sharing the details of my financial situation with others?
• Do I think I can reach my financial goals without outside expertise?
• Can I find someone that I can trust to help me reach my financial goals?

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:

• Analyzing budget and spending habits to find areas where a client could trim expenses.
• Helping to create short-term and long-term savings strategies.
• Reviewing retirement goals and helping to build a savings plan to meet those goals.
• Offering advice on how best to save and pay for college.

(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:

• Payments to the Advisor or Advisory firm based on products sold to clients such as insurance, annuities, and high-cost mutual funds.
• Compensation to Advisors associated with quotas, bonuses or sales contests.
• Compensation connection with the financial professional’s attendance at third-party sponsored trainings and conferences
• Compensation to the Advisor or Advisory firm for steering your brokerage business to a particular Broker-Dealer.

(3) What kind of experience does the Investment Advisor have?

• How long have they been in business?
• Are they registered with the state or the SEC?
• Do they have experience with investing across a range of asset classes?
• What types of clients do they serve?
• Has the firm been subject to any disciplinary action by regulators – or party to lawsuits from clients? This needs to be disclosed in their Brochure!
• Have they filed for bankruptcy protection?

(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.

• Wealth Management -- may include a client investment profile, a portfolio holdings review, asset allocation review, proposal and investment strategy recommendations and implementation.  Find out whether your portfolio is personalized to you – or a selection from a menu of cookie cutter portfolios.
• Financial Planning -- may include budgeting, cash flow analysis, assessing current financial situation, defining financial goals, net worth statement, debt management, lifestyle planning, major buy/sell decisions, risk tolerance review, asset allocation design, portfolio holdings review and portfolio analysis. 
• Insurance Planning – may include a life insurance review, disability insurance review, needs analysis, disability, long-term care, risk management and liability insurance. 
• Education Planning -- tuition planning, education account reviews and education funding. 
• Retirement Planning -- retirement accumulation planning, income analysis, longevity planning, retirement account review and distribution analysis. 

(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.

For 50 Tips for Saving Money, Investing & Living a Happier Life, click here.

At ESG Wealth Advisors, we pride ourselves on building customized solutions for every client at an affordable rate. For free, no obligation consultation, call 267-613-8406 or schedule an appointment here.