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Investment advisors-invaluable or waste of money?
When it comes to investing, it's important to know what you're doing and where you're putting your money for a number of reasons-making the wrong decisions about investing can cost you a lot of money.
This is why many people opt for investment advisors. A professional investment advisor gives advice about securities to their clients, such as investing in stocks, bonds, mutual funds, IRAs, and other forms of investments. They typically charge a fee or make a commission on your sales.
Do I need an investment advisor?
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Investment advisors are useful to those who are just beginning to invest, or who have a lot of money to invest and are not sure where the smartest places to do so are. They are also helpful to anyone who is not comfortable with their own knowledge of investing and would like the educated advice of a professional.
How do I find a professional investment advisor?
When looking for a professional investment advisor to help you manage your investments and make the most of them, you will want to meet with them face to face. Make sure you have a rapport with them and that they are someone you will be comfortable working with and entrusting your money with. Some questions to ask include:
- What experience do you have with people in similar circumstances as mine?
- What licenses do you hold and what organizations are you registered with?
- What products and services do you offer?
- Have you ever been sued or disciplined for unethical behavior?
- What is your fee structure? Are you paid in a fixed hourly rate, by commission, or by a combination?
What costs should I expect to pay for a professional investment advisor?
When it comes to paying investment advisors for their services, they can charge for their services in a number of ways, including:
- Hourly fee. This type of advisor bills his or her clients by the hour for the services he or she performs.
- Fixed fee. An investment advisor who charges a fixed fee will typically charge a flat fee for a certain amount of hours. The client then knows exactly how much to expect.
- Commission based. This type of arrangement is similar to a broker. A commission based investment advisor charges commission on a certain percentage of the securities they sell.
- Combination. Some investment advisors will charge for their services with some combination of the above fees.
Before you hire any professional investment advisor, it is very important that you know how they get paid. Make sure you understand completely their fee structure, so you won't have any surprises when it comes time to pay them for your services.
As far as which type of fee structure is best, it depends on your investment habits and your needs. Some professionals recommend paying by the hour, which could save you money if you are trading large amounts of money.
If you have a smaller portfolio, however, and don't do a lot of trading, a commissioned based investment advisor could be a good idea for you.
A professional investment advisor can provide a number of valuable services to investors, but these services do not come cheap. However, if you don't know where to start with investing or are unfamiliar with the market, an investment advisor can be invaluable to you.
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