Tips for Evaluating Investment Advisors
Putting your money into investments is often wiser than just keeping it in a savings account. Working with a knowledgeable advisor can further boost your success. Whether you’re new to investing or have experience, a reliable advisor can help you get better results. Here are some tips to help you find the right advisor:
**EDUCATION AND EXPERIENCE**
Just as you’d be careful to only let a qualified doctor handle your health, you should ensure your investment advisor knows the market well. Check their background and previous experience. You can do this by looking at their website and reading independent reviews about their skills and education.
**PROPER LICENSING**
After confirming their qualifications and experience, make sure they have the right licenses. Investment advisors need to pass the Series 65 exam to become Registered Investment Advisors. While certifications aren’t required, they can increase an advisor’s credibility and give you more confidence. Certifications to consider include Personal Financial Specialist, Certified Financial Planner, Chartered Financial Consultant, and Chartered Financial Analyst.
**FEES**
Before you hire an investment advisor, it’s important to understand how they charge for their services. They should clearly explain their fees, as this can reveal any conflicts of interest, particularly if they make money from commissions. Fee structures vary, with options like assets under management fees, hourly fees, or flat fees. Also, ask about any extra costs not covered by the base fee to avoid surprises.
**OPT FOR A FIDUCIARY**
Choosing a fiduciary advisor ensures your interests are prioritized because they are legally required to act in your best interests. While non-fiduciary advisors might give good advice, it may not always be the best fit for you.
**RUN A CRIMINAL BACKGROUND CHECK**
It’s essential to conduct background checks on potential investment advisors during your evaluation. Though you can ask them directly about their criminal history, a thorough check will give you clear answers. This may also uncover any past regulatory issues with investment authorities. Requesting references from current clients can also increase your trust.
**DEGREE OF INTERACTION**
Determining how often you want to interact with your advisor is key. You might prefer annual check-ins or more frequent updates. Discussing your investment goals with potential advisors can help establish a meeting schedule that works for both sides. Setting an agenda for each meeting is also beneficial.
