It is no secret that the market is doing badly and no one is expecting a real turn-around till mid next year. Every investment decision is fraught with risk. You only want the best for yourself and your money. While you may make your investment decisions, it might help to get a little third party advice. This is where investment advisors come in. Their job is to take care of your money so that you get the best possible returns. The responsibility of the job is large and so it is critical that you choose the right investment advisor. We have put down together a few things that would help you in making the right decision.
Qualifications
Ask for the educational qualifications and experience of your potential advisor. Make it a point to learn more about his/her investment history and get a list of references. Investors are also expected to register with the SEC if they handle investments above a certain threshold. Investment advisers who manage $25 million or more in client assets must register with the SEC. If they manage less than $25 million, they must register with the state securities agency in the state where they have their principal place of business.
Background Check
Ask your investor upfront about their legal history – whether they have been disciplined by any government regulatory or sued by a client.
If this has happened, investment advisors are required to fill a form called “Form ADV” with either the SEC or the state securities agency in the state where their principal place of business is. Form ADV consists of two parts – part one contains information about the advisor’s education, business and history of problems (if any) with regulators or clients and part 2 contains information on the advisor’s services and fees.
More of A Consultant, Less Of A Salesman
While the main job of the investment advisor would be to recommend products, their approach should be not that of a salesman. They should provide you with complete investment solutions.
Last But Not The Least, Managing Their Fees
Before you hire an investment advisor it is also good to know how they are paid. You don’t want to be paying more than required in fees! There are several ways of paying the advisors. They can charge you on an hourly basis for the time they spent on you. They can also charge a fixed or a commission based fee. Mostly, it is a combination of the above options.