Finding an investment advisor is not as easy as choosing the first person who appears in a quick online search. Think of it as finding a compatible match. While you will want somebody who excels at what they do, they will only shine for you if they get where you’re coming from, your motivations for investing, and what you want to achieve. For instance, those who have kids may look for a financial advisor who can help them setup an investment account for kids. You need to be aligned, and while you’re not looking for someone to be your friend, you will get on better with somebody with which you gel. After all, if you’re an extremely conservative person, you may not always see eye-to-eye with somebody who has a reputation for working hard and partying harder. If you’re ready to make the leap into becoming an investor but need to find that person to jump with, here are a few ways you can go about it.
Are They Respected Within the Industry?
It is always an excellent idea to speak to as many people who know the investment advisor as you can. You can paint a much clearer, well-rounded view of someone if you can talk with current and past clients, colleagues, and peers to ascertain the type of person and advisor they are. You can find this type of information by searching online for them by name or by looking at investment forums.
Are They a Fiduciary?
If you’re not heard this phrase before, you’re not alone. It’s a term many investors have never heard of, but it’s vital to know because, by law, a fiduciary advisor is required to put your interests first. They are entirely independent of any brokerage firm or bank, and their recommendations are based solely on your personal circumstances. Many mutual fund companies and brokers offer investment advice, but their motivations are to drive you to their own products.
Do They Respect Your Willingness to Bear Risk?
Remember, your family’s future lies in your investment advisor’s recommendations, and this will have a bearing on how adverse you are to risk at any particular point in time. You’ll go through different stages in your life; as a Dink (dual income, no kids) you may be happier to raise the stakes in terms of the risks you’re prepared to take, while at other times (a new baby on the way, taking out a mortgage on a home) your risk aversion may be much higher.
Are They Clean From Any Filed Complaints?
While complaints made to FINRA can be subjective, it’s always worth knowing what has been filed against the advisor so you have full transparency on the situation. For example, a claim may have been filed, but the advisor denies it, and nothing more comes from it. Conversely, they could have several complaints made against them, all for the same thing, which would indicate a behavior you might prefer to avoid. FINRA’s BrokerCheck online tool, the SEC’s Action Lookup Tool, and your state securities regulator are all comprehensive sources of information.
What professional designations do they hold?
Many professionals can claim to hold a designation, but how can you tell if what they’re claiming is a legitimate credential? Fortunately, there’s an easy way in which you can check the validity and also find out a little more about what their qualification entails. Using another FINRA tool, their designation checker, you can conduct some swift desk research and find out all you need to know.
Choosing an investment advisor is a considered process; your future deserves all due diligence. You need to know the person you choose is the right fit for you, and you may have to meet with a few before you find the right one. Don’t throw all your eggs in with the first person you speak to; take your time, do your research, and soon you’ll be enjoying a profitable relationship.
