If your money is valuable to you, then you should spend some valuable time to looking for the right investment professional to help you to manage your money. Before you agree your hard-earned money to a financial planner, stockbroker, or investment advisor, you should spend your time to picking the right professional for the job.
A smart decision can help you to avoid your money being lost to irresponsible professionals or even scam artists. There are several factors that you should consider when you are choosing an investment professional :
1) Identify what your financial needs are
You must spend some time to getting to know your financial goals and the types of investments that will aid you in this process. Having a baseline idea of what you want to happen with your money and will give you an idea of what kind of professional that can help you to achieve your goals.
2) Collect information about potential good fits
Comparison shopping is just as important in choosing an investment professional as in buying a car. While recommendations from friends and family are a good starting point for you, then you still need to search and collect more information. You should always check potential investment adviser’s professional history out their credentials, work history, possible disciplinary action or pending complaints against them. You can also check this information out for free through the government’s BrokerCheck website. An investment professional should always be registered with at least one governing body. You can contact your state’s securities regulator to find out exactly how they should be registered and if they are registered appropriately.
3) Interview at least Two Professionals
You should meet with at least two potential professionals in order to get the difference idea between them. When interviewing, ask the investment professional straight-forward questions that you’ve prepared beforehand. The investment professional should take the time to answer your questions directly and thoroughly. If you get confused, ask them back to review what they had just said. You must always be prepared because charming investment professionals aren’t always the best fit. In fact, charm can be a way to blindside investors into scams and bad deals. Make sure that you like more than just the professional’s personality.
4) Find out how the investment professional is compensated
Professionals in the investment field are paid in a variety of ways- commissions, flat fees, hourly fees, salaries, or interest off of funds they manage. It is important for you to understand how your investment professional will be paid from your relationship. A financial planner who works off of a commission for selling stock in certain funds may not end up having your best interest in mind, despite their fiduciary duties.
Finally, investment professionals are usually competent and have your best interest in mind, but financial fraud continues to occur. Because of this, it is important for you to train yourself to the best of your ability about the types of investments that your money will be put in and the people who you entrust to make those decisions for you. Spending the time upfront to choose a suitable stockbroker, financial planner, or investment advisor that can make sure that you do not fall prey to financial fraud in the long run.