Choosing an Investment Advisor

investment advisor

You will never have a problem finding an investment advisor. The challenge is deciding what kind of advisor to work with.  Deciphering what type of investment advisor to hire requires knowing something about money – and your personality – and understanding a slew of confusing terms.

It isn’t an impossible choice, of course.  Plenty of people have picked investment advisors and lived to tell about it – but if you want a solid working relationship and one that helps you make smart investment decisions, and lots of money, it helps to understand what you’re getting into and why you’re even talking to an advisor in the first place.

You could hire a investment planner, an accountant, an insurance agent, an attorney – they all will give valuable investment advice and portfolio management – but if you’re new to this game of hiring an advisor, you probably don’t need all of them at once.  You’ll likely want to hire a certified investment planner.  As for finding one, you can certainly start searching the Internet, but a good course of action is to start with recommendations from friends, family or colleagues.

The investment industry has two sets of compliances that advisors have to follow called the suitability standard or the fiduciary standard when purchasing investment property.

  • Fiduciary standard. This is when your investment advisor is legally bound to give you good advice – advice that fits your needs.  They’re also referred to as fee-only advisors; you’ll typically pay a quarterly fee that’s calculated as a percentage of the assets your advisor is managing.
  • Suitability standard. As investment advisors who follow the fiduciary standard will gleefully tell you, advisors who follow the suitability standard are only legally required to make sure the investments are suitable for you – they aren’t required to necessarily be your best option.  An investment advisor following the suitability standard works on commission, paid from a percentage of the money that you’re investing.

Get to know your prospective advisor.  Shop around.  You are the client.  Advisors recognize you may talk to a number of professionals.

And when you do talk, try to get an understanding of the advisor’s style.  Do they buy and hold, or are they more aggressive?   What assets are they very knowledgeable in – equities, real estate, bonds commodities?  Everyone has some kind of bias that they bring to the table, and understanding it will keep you better informed about risk.

Also make sure your advisor has a solid understanding of tax, estate issues and investment management.   At the end of the day, bad tax and estate planning can make decades of good hard work and savings disappear.  Any advisor you’re considering should either have some background in these issues or have attorneys, estate planners and accountants that they work with that can help you.  Also ask investment advisors about their past job experiences and how long they’ve been advising clients.

Stop looking for investment advisors and work with SWFL’s top rated firm, Asset Quest.  Give us a call at (239) 541-8448.