There's no shortage of financial advice and investment tips. Financial gurus hold forth on television talk shows and fill bookstore shelves with their theories about how to get rich. Newspapers and magazines are bursting with advertising hype. The internet is awash with financial schemes. And, of course, friends and family members offer their own pearls of wisdom.
Where should you turn for professional, trustworthy guidance? It's a crucial decision and you should not put your financial future in anyone's hands without careful thought and thorough investigation.
A good financial advisor will undertake a complete study of your financial holdings, your tax situation and your long-term goals. Based on these factors, s/he will then develop a comprehensive investment strategy and recommend investments to implement that strategy. Once your investment plan has been developed, the advisor will put it into action and monitor your portfolio. S/he will handle the administrative details and communicate regularly with you about your investments.
To do this, you should look for someone with deep experience, a strong theoretical background, access to research and technical support, and solid knowledge about investment management. Your advisor should be able to draw upon a wide variety of investment options, not just a family of mutual funds. You should look for someone who offers individualized service and will be available when you need them.
Before you hire any financial professional, make sure you understand how that person gets compensated. Investment advisers generally are paid in the following ways:
* A percentage amount based on the type and value of the assets they manage;
* An hourly fee for the time they spend working for you;
* A fixed annual fee;
* A commission on the securities they sell; or
* A combination of these.
Each compensation method has potential benefits and possible drawbacks. Ask the investment advisers you interview to explain the differences and get several opinions before making a decision.
Above all, the financial advisor you select should be someone you trust and feel comfortable with. A successful investment management relationship is based upon open and consistent communication. You should seek someone who will listen to you, answer your questions, and represent your investment philosophy.
Be thorough in your research before making a final decision about a financial advisor. Above all, choose someone you trust and believe in to guide you on your way to a secure, prosperous future.