5 Questions To Ask Your Investment Advisor

If you’re on the hunt for an investment advisor, you are not alone. According to a 2012 Merrill Edge Report, nearly 45% of U.S. consumers work with some kind of financial professional when making investment choices — and that number is growing.

It shouldn’t surprise anyone who has been paying attention. The stock market’s highs and lows have been unpredictable enough to make stuffing your money into the mattress seem like a viable option.

You’d likely prefer to watch your retirement dollars grow into a comfortable safety net for the future. If so, then it may be time to find an investment advisor. Not just any advisor, but someone whose experience, attitude and approach meet your needs and your comfort level.

An advisor should work for you and with you on an investment game plan. Don’t be afraid to ask about the fine print. Here are five essential questions to get you started:

  1. What services do you offer? Sounds simplistic, right? The thing is that investment professionals can offer a range of services, depending on their expertise and interest. Some only advise you on what to invest in and how much, while others collaborate with you to come up with a big-picture financial plan that covers both short-term expenses (such as college tuition) and the long-term (a comfortable retirement). Do your homework so you know what kinds of services you want and who offers them.
  2. What are your qualifications? It seems like a picky question, but you want to know that the person guiding and managing your investments has the necessary education, training and credentials to make the best-informed decisions possible. So go ahead, ask. How many years have they been in the business? What licenses and designations do they have? Are they a Registered Investment Advisor (RIA), and did they pass the SEC Series 65 exam? Do they stay current with changes, new policies and regulations? Make a list, and don’t stop until you get the answers you want.
  3. What will I pay in total fees? Fees come in a variety of forms. What and how much you pay can depend on the types of investments in your portfolio. Your advisor might charge you a percentage of your assets under management, an hourly fee for phone conversations and face-to-face meetings, a fixed fee, or a combination of all three. Find out up front how your advisor works.
  4. How do you work with clients? Trust, comfort, reliability — these are qualities people look for in friends. Why would you demand any less from your relationship with your investment advisor? Find out exactly who you’ll be working with, an individual or a team, and how many times a year you can expect to meet with them, either in person, on the phone, even via Internet video calling. Do they hold regular meetings? Are they available to answer your questions outside those scheduled times? Your comfort level is what matters.
  5. What is your investment approach? Some investment advisors have a formal approach to investment management and some do not. Find out whether your advisor can make decisions consistent with your own preferences. Ask yourself whether you are a conservative investor or a risk-taker, or if you’re looking for a combination of long-term security and short-term gains. Only you have the answers. Make sure your investment advisor does, too.
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