Investing your money can often be a better choice than just leaving it in a savings account, especially with the help of an experienced advisor. Whether you’re new to investing or have been doing it for a while, a reliable advisor can improve your investment results. Here are some tips to help you choose the right advisor.
EDUCATION AND EXPERIENCE
Just as you would be careful about trusting a doctor with your health, you should be cautious about who handles your money. Make sure to check the professional credibility and past experience of any potential advisor. You can do this by looking at their website and reading independent reviews that describe their experience and educational background.
PROPER LICENSING
After confirming that an advisor has the right credentials and experience, you should also check their current licensing status. Investment advisors need to pass the Series 65 exam to become Registered Investment Advisors. Although certifications aren’t mandatory, having them can reassure you about their expertise. Look for certifications like Personal Financial Specialist, Certified Financial Planner, Chartered Financial Consultant, or Chartered Financial Analyst.
FEES
Before you decide on an investment advisor, understand how they charge for their services. They should be clear about their fees so you can identify any potential conflicts of interest, such as commissions. Typical fee structures include a percentage of assets under management, hourly fees, or flat fees. Also, ask about any extra costs that might not be included in the main fee to avoid any surprises.
OPT FOR A FIDUCIARY
Choosing a fiduciary advisor is a good move because they are legally required to prioritize your best interests. While non-fiduciary advisors can offer good advice, it may not always be the best for your specific needs.
RUN A CRIMINAL BACKGROUND CHECK
Doing a background check on potential investment advisors is a crucial step. While you can ask them directly if they have a criminal record, a formal background check will give you definite answers. This check can also reveal if they’ve been investigated by regulatory bodies. Getting references from current clients can further increase your confidence in them.
DEGREE OF INTERACTION
It’s important to decide how often you want to interact with your advisor. Some people prefer annual meetings, while others want more frequent updates. Sharing your investment goals with potential advisors can help set up a meeting schedule that works for both of you. It’s also helpful to set an agenda for each meeting.
By following these tips, you can find an investment advisor who is well-qualified, trustworthy, and aligned with your financial goals.