What Should an Investment Advisor Do For You?
A fiduciary should work for you. They should put your needs first ... above their own. They should offer a variety of products and combinations of products which are designed to meet your goals ... whether that is to increase the value of your assets, protect your portfolio for the benefit of your family, or provide a lifetime income for you and your spouse.
The fiduciary should do this and, at the same time, help you avoid high commission products, funds which are heavily front-loaded, or investments which give large incentives to the salesmen.
In fact, a fiduciary should be creating a comprehensive investment plan designed to meet your needs, without causing you to pay unnecessary or excessive commissions.
What Are Examples of Fiduciaries?
The type of investment advisor you are seeking could be a LPL - Financial Advisor, a CFP - Certified Financial Planner, an IAR - Investment Advisor Representative, or someone with a similar background, education and designation.
The person you choose should have knowledge about tax planning, asset allocation, risk management, retirement planning and estate planning. They should also know about a wide variety of investment products, including life insurance, annuities, growth stocks, dividend stocks, tax-free bonds and funds. They should be capable of putting together a balanced portfolio which is diversified. They should not rely on just one type of product or products from only one company.
How Can You Find a Reliable Financial Advisor?
Your first step in choosing a financial advisor is to see if they are a Certified Financial Advisor, an Investment Advisor Representative, or one of the similar designations mentioned above. Next, ask them what agency oversees their business. It should either be FINRA (Financial Industry Regulatory Authority) or the SEC (the Securities and Exchange Commission). Some advisors may be registered with both. Your advisor or other employees of their company may also hold insurance licenses, be a CPA and or have other professional designations and certifications.
Go to the appropriate regulatory agencies and check out both the advisor and their company. Confirm they are licensed and see if any complaints have been filed against them. You are also looking to see if the information the agencies have is the same as what the advisor has told you. You need to be confident they are not touting a phony degree or designation which does not exist.
You can also used the website Brightscope to see what licenses they hold and if there are any disclosures about them.
Finally, you may simply want to Google their name and see what comments there are on the internet about them. A few vague complaints may not be a problem. However, too many negative comments and indications of disciplinary actions against them could be a red flag.
When Should You be Concerned About Your Financial Advisor?
Financial advisors are required by law to avoid conflicts of interest and to put the needs of the client above their own. They should give you a wide range of advice, but not make you feel you are getting a "hard sell" on any particular products.
A Financial Advisor should also keep you informed and disclose any news which might arise affecting your investments and financial planning.
Despite the research you have done prior to hiring a financial advisor, if their actions make you feel uncomfortable, share your concerns with other business advisors in your life ... the person who does your taxes, your lawyer, etc. You may decide to shop around for another advisor if you feel your current one does not have your best interests at heart.
Remember: This is your money and you have the right to feel confident it is being handled correctly and safely.
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