What you need to know before choosing an investment advisor

One of the most difficult tasks when you are investing is choosing an investment advisor. It is important to understand what they are and how to best go about choosing one, since this will be the person who helps guide in the world of investing. If you take the time to educate yourself and find out what you should be looking, for when choosing an investment advisor, you will be much more likely to choose the right person for your investing situation. Here is what you need to know before choosing an investment advisor-

• Understand what an investment advisor is-When you are choosing an investment advisor, you are choosing a person or a firm that will be in the business of giving advice about investing. This advice will be given on the best information that the person or firm has, to the client who is investing. It is important to keep in mind that any person or business, that profits, from giving advice on investing, is considered an investment advisor. This is true whether they are advising on stocks, bonds, mutual funds or exchange traded funds. In addition, if someone is managing a portfolio of securities, they are also considered an investment advisor.
• Understand what the difference is between a financial planner and an investment advisor-It is important to understand that not all investment advisors are financial planners; however, most financial planners are investment advisors. This can be confusing. Keep in mind that if you are using the services of a financial planner, they will be looking at every financial aspect of your life. This can include but is not limited to: savings, investments, insurance, tax liability, retirement and estate planning. An investment advisor (who is strictly an investment advisor), will be helping you deal with just investments. A financial planner will help you develop an overall financial plan, for achieving all of your financial goals, and not just your investing goals. In addition, it is important to understand that some people, who may say they are financial planners, may only be able to recommend just a few products and sometimes those products are not even actual investments. Financial experts advise that before you hire any professional to deal with any aspect of your finances, that you should have a clear idea of exactly what kind of services that you need. You should also understand exactly what the professional can and cannot deliver, what you are paying for, what every service costs and most importantly how the financial professional will get paid.
• Understand the questions you should ask, before hiring an investment advisor-There are some very important questions that you should get answers to, before hiring any financial professional this is especially important when dealing with investment advisors, since there are many legal issues that go along with investing.

These questions are: 1. What experience do you have? Have you helped people with my specific financial circumstances? 2. Where did you get your education? What is your most recent employment? 3. Where are you registered? What licenses do you hold? Are you registered with the SEC? 4. What types of services and products do you offer? How wide is the rage of products or services that you offer? 5. How are you paid? Do you charge an hourly rate, flat fee or commission? If you are paid with an hourly rate, how much is it? 6. Have you ever been sued by an unhappy client? If so, why? Have you ever faced disciplinary action by a government regulator? 7. If the investment advisor is registered-Will you send me a copy of both parts of your Form ADV?

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