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The financial industry can seem large and intimidating. In fact, one reason most Americans don’t invest outside of their workplace retirement plans is because finding the right advisor is not easy (i.e., someone you can trust). The only stories we see or hear about are the ones where investors were taken advantage of and ultimately lost all or part of their money. However, there are lots of great advisors, and you need to pick just one.

In the end, if you need an investment advisor, don’t be afraid to pay that person…that is what he or she his there for. Just make sure you choose the right one to reach your financial destination.

To help you choose the right advisor we wanted to share the following information:

Understand their expertise

Investment advisors have different areas of concentration and offerings:

  • Financial Planning – focuses on a variety of areas such as setting financial goals, insurance needs, estate planning (wills and trusts), retirement, and investing.
  • Investment Advisory – focuses almost totally on which investments to choose based on your goals.
  • Retirement Planning – focuses on marrying all sources of income to maximize tax advantages and to ensure that you don’t run out of money during retirement (i.e., social security, retirement funds, investments, pensions, cash, etc.).

So, depending on where you are in your career, you want to choose the advisor who has the right concentration to meet your needs today.

Make sure he/she is certified

Having the right credentials is paramount in this industry. Like in all industries, some professionals are legit and others are out to take advantage of you.

It takes a great deal of expertise to guide your finances in the right direction. You are counting on this person to get you there, so you want to make sure he or she has the right credentials.

There are several distinctions an advisor can attain, and in some cases, he/she might have more than one. Following are a few of the most popular:

  • CFP – Certified Financial Planner
  • PFS/CPA – Personal Financial Specialist/Certified Public Accountant
  • CFA – Charted Financial Analyst
  • CIMA – Certified Investment Management Analyst
  • RMA – Retirement Management Analyst
  • RICP – Retirement Income Certified Professional
  • CRC – Certified Retirement Counselor

How do they get paid?

The way an advisor is compensated can influence the recommendations presented to you. As a rule of thumb…

– If you just want to purchase investments to hold for a long period of time (buy and hold), then you just need to pay a one-time commission or hourly rate (if you need assistance).
– If you want an active portfolio (where you are trading often) then a fee-based advisor might be more cost effective.

Verify Their Credentials

Always, always, always verify the credentials of your advisor…no matter who they are (i.e, family, friend, acquaintance, childhood buddy, church member, co-worker, etc.).

When you verify credentials, you are looking for a few things:

  1. Certification verification
  2. Complaints against him/her
  3. Complaints against the company
  4. Lawsuits against him/her
  5. Lawsuits against the company
  6. Fines due to complaints

Sites to visit include:

  1. www.FINRA.org
  2. www.SEC.gov
  3. www.CFP.net
  4. www.Brightscope.com (lists all organizations the advisor is listed with)

Just input his or her name, and you will get the information you need to make a decision.


Choosing the right advisor can be arduous but well worth the time and effort to make sure the person and company managing your money is solid. You want to be able to sleep at night and feel comfortable that you are not being a victim.

To learn more about this topic take a look at our in-depth newsletter titled Did I Hire the Right Financial Advisor? How Do I Know…? Also remember you can subscribe to the BC Holdings’ FinTip where we cover financial news, information and tips. You can sign up by clicking here.

 

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