Retirement Investment Advice

How To Choose A Retirement Investment Advisor

Where do you start when looking for Retirement Investment Advice? It's a good idea to start with a qualified investment advisor. Here, Jason Hoerr offers his thoughts on doing just that.

Need for skilled investment advisor

Over the past 30 years, investment advising was not that difficult. U.S. equity markets rallied aggressively, as the U.S. experienced its most powerful secular bull market in history. Today, things are different. The hangover of the 2008 economic collapse just will not go away - unemployment remains at stubbornly high levels, economic growth remains muted, and financial risks remain strong in other developed nations, such as the entire Euro Zone.

In today's fragile economy it takes a skilled investment advisor to navigate these difficult waters. Surprisingly, most people take a rather passive approach to selecting an investment advisor. The process that the average investor undergoes is to ask friends and family, maybe search the internet for a few hours, and then decide on an investment advisor without any real research on the investor himself or herself. 

We believe it is essential to treat the process of choosing an investment advisor in the same manner as if you were an employer about to fill the most important and strategic role in your company. 

Things to do

We'll get to the actual questions you need to ask in a minute, but first of all, run a criminal background check on your investment advisor. Check to see if there are any serious criminal charges on his record. You do not want a person handling your personal finances if he cannot handle his own personal life. If he has a track record of DUI's (Driving under Influence) or domestic battery charges, or other criminal charges, it is probably best to look for another advisor. 

Next run a regulatory background check. Make sure he or she is in full compliance and good standing with the appropriate regulatory bodies. In most cases, you want to deal with a Certified Financial Planner (CFP). You can conduct a background check on CFP's at both the CFP Board of Standards and FINRA (Financial Industry Regulatory Authority). 

Questions to ask

Making sure that a potential advisor holds the proper credentials and passes a criminal and professional background check are the first steps to take. Once you have that out of the way, now you can move on to the more direct assessment. 

The best thing to do is send an email to the advisor you are considering with a few basic questions. Then, schedule a time to meet with him or her to discuss things further. You should treat the in-person meeting as an interview. If you are married, make sure to take your spouse. 

How are you compensated for your services?

based on commissions. That means that each transaction in your account brings money to the advisor. This is a bad compensation model because the advisor has no real vested interest in you making money. In this type of compensation plan, an advisor will typically be more of a salesperson, trying to guide you into specific investment vehicles where he gets a larger commission payout. 

Other advisors charge a flat fee to develop a plan for you and others receive a fixed management fee based on assets under management. Both of these options are fine. If a person earns a management fee based on assets under management, then he or she will be very motivated to grow your account in a sustainable manner because more assets equals a greater management fee. 

Talk with current and one former client with similar financial profiles?

Check with current and former clients to make sure they are pleased with the advisor's services. Make sure to let him or her know you want to speak with clients that are not family and friends. These are just a few basic guidelines to help you choose the right financial advisor. Above all, use common sense and make sure you feel 100% comfortable before handing over any of your hard-earned money.

Disclaimer

No information or opinion contained in this article should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Trading forex carries a high level of risk and may not be suitable for all investors. Any opinions, news, research, analysis, prices or other information contained does not constitute investment advice. 


Stay in touch and subscribe to my monthly email newsletter, "Retirement Stories". It is full of new stories and tips on planning for and enjoying an active retirement.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Retirement Stories.


New! Comments

Have your say about what you just read! Leave me a comment in the box below.
| Retirement Planning | What's New | Disclaimer | Contact | Privacy

Return to top