The decision to trust someone with your hard-earned money is very personal.
The decision to trust someone with your hard-earned money is very personal. And, since you’re basically hiring someone to provide expertise that you don’t have, it can be tough to tell the good expertise from the fluff.
Whether you’re looking for a financial advisor on your own or are referred by Merv, consider these five criteria before you begin your relationship.
1. Customization Based on Your Needs
Your needs are unique—and your investment strategy should be too. Make sure your advisor takes the time to understand your personal goals in order to recommend a customized plan that aligns with your risk tolerance. For example, your advisor may select investments that earn less in your portfolio yet make you feel more comfortable.
2. Compensation That’s More Than Just Commission
Consider an advisor who charges a fee for services rather than commission-only from sales of stocks, insurance or other types of investments. This can be an hourly fee, or a percentage of your portfolio. But it helps ensure that he or she is working to grow your investments, not profiting primarily from sales.
3. The Right Kind of Experience for Your Situation
While it’s a good rule of thumb to look for at least three years of experience working as a financial advisor, be sure to ask in what type of investing your advisor is most experienced. If he or she answers “active trading in equities” and you’re looking for a conservative financial plan or are about to retire, it may not be a good match.
4. An Investment Approach that Matches Your Goals
Every investor is unique. Make sure your advisor’s investing philosophy isn’t too conservative or aggressive for your investing style. And, be sure to check their assumptions when projecting rates of return. If they seem particularly rosy (e.g., 15% with an inflation rate of 2%), their goals might not be very realistic and/or attainable for the long-term.
5. Investment Answers When You Need Them
Regardless of how much you have to invest or how often you prefer to meet to discuss your portfolio—perhaps quarterly or even yearly—your Advisor should always be available to give you answers to questions you may have about your investments. If he or she doesn’t return your calls promptly, it may be time for a change.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
To determine which course of action may be appropriate for you, consult your financial advisor.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
LPL Financial representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
This material has been prepared by LPL Financial. A registered investment advisor, member FINRA/SIPC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.
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