You work hard for your money. That’s why it’s important to also make your money work for you. But what does that really mean? It could mean working with an investment professional with the skill and knowledge to help grow your wealth.
There are plenty of financial advisors out there. But they aren’t all equal. There are different areas of expertise, and there are obviously good advisors and bad advisors. How can you know the difference? It’s not as complicated as you might imagine.
In this article, we look at what you should consider before hiring an investment pro. Keep reading to learn the facts.
Identify Your Financial Needs
Before beginning the process of determining the kind of investment advisor you might need, you need to sit down and determine with you actually need one at all. What are your personal financial needs? Why do you think you’d benefit from working with a professional?
There are several benefits that investment professionals can provide. Perhaps you are planning for retirement and wish to position yourself to maximize your savings rather than simply letting it sit in a bank account. Perhaps you want to grow your wealth aggressively. Perhaps you want to diversify to protect your wealth.
Taking the time to determine what your needs are will better enable you to know the type advisor who will best serve you.
Determine Type of Advice Are You Seeking
Many people think they understand the world of investing more than they actually do. And yet solid investing advice can be extremely valuable for growing your wealth. The better you understand your own strengths and weaknesses, the better you will know the type of professional counsel to seek.
What type of advice do you need? Are you wanting help in growing your money, or to better understand the stock market and other financial products? Investing is a complex endeavor, and the more experience you have working for you, the easier it will be to see strong returns on your money.
Get Suggestions From Family & Friends
As with anything else, always start your search process by getting recommendations from family and friends. Talk to people you trust and ask them about investment professionals they currently use or have used in the past.
This is your chance to get advice and direction from the people closest to you who will have your best interest at heart.
Make a list of questions to ask and take good notes. And once you have solid feedback from loved ones, you can take that information and research online about the suggestions they’ve provided.
Understand the Different Types of Advisors
In the financial industry, it is important to understand that there are basically two types of compliances that advisors follow. These are the suitability standard and the fiduciary standard. It’s crucial to understand the difference.
Under the fiduciary standard, financial advisors are legally bound to put your interest before their own.
Under the suitability standard, it only requires advisors to make investments that are suitable for you. Thus, it doesn’t necessarily have to be the best option.
This type of advisor works on commission rather than charging a flat fee. Thus, they are more incentivized to invest your money in products that will line their own pockets rather than yours.
Keep in mind that while knowing the difference is very important, one isn’t necessarily superior to the other.
Advisors who follow the fiduciary might try to lead you to believe that they are morally superior and thus the more trustworthy choice, their reputation with other clients should ultimately be the deciding factor.
Check Their Credentials and Background Online
The internet is a great resource for researching professional advisors. And with so many to choose from, you need to gather as much reliable information as possible.
Use your list of recommendations. Research the investment firms as thoroughly as possible, paying special attention to their professional credentials, and any background information that might be available online.
A reputable investment firm will be proud to show professional accreditations and list the trade associations they are members of. Are they a big firm or a small firm? The more you can find out about them the better, and more confident you will fill talking to them when it comes time to interview them in person.
Set Up Interviews
Now you need to interview each potential advisor face to face.
An interview provides you with a chance to get a feel for them and their personalities above and beyond who they are on paper. Do you feel a connection? Are they good communicators and listeners?
Come prepared with plenty of questions, and don’t hesitate to seek clarification regarding their methodology or to request the names of present or past clients.
Keep in mind that talking a reputable advisor like Christopher Sarofim is worth the time and effort.
How Do They Make Money?
As mentioned earlier, it’s important to understand exactly how they make money. Is there income commission-based? If so, this will almost certainly impact their investment choices, as well as determine how aggressive they are with your money and the type of risks they are willing to take.
Making Your Choice
Once you’ve interviewed the firms on your list, it’s time to evaluate and make your decision. This is ultimately a very personal choice and could be based on several factors. You could go strictly on the numbers, or their reputation in the community, or simply based on your gut feeling when talking to them.
The key is to take your time, ask good questions, and find the best match for your investment needs.
Finding the Right Investment Professional for You
When it comes to hiring a good investment professional, never settle. After all, this is your money we are talking about. Do the research, ask the right questions, and then go with your gut.
For more investing tips and tricks, explore some of our other blog posts.