If you are like most of the population, you lead a busy life. You likely have a job. You may have a family or a romantic relationship. You have countless commitments that occupy your time and your mental capacity. You don’t have enough time to research and perform due diligence about various investment opportunities and financial strategies.
A well-balanced and aggressive financial plan is necessary to fund a comfortable retirement and meet a few additional financial goals. Most people do not have the knowledge or the time to do it themselves. Fortunately, there are professionals in the world of finance who can help you with your financial planning so that you can focus your time and attention on tasks you find more appealing while still enjoying the benefits of a solid financial plan for your future.
Types of Investment Professionals
You will be surprised by the sheer number of investment professionals who can help you accomplish various financial planning goals. Among the options available to you in small and large cities across the country are the following:
- Investment advisors
- Financial planners
- Accountants
- Insurance agents
- Attorneys
With so many professionals available, the difficulty may be in determining which type of professional will serve your unique and specific needs best.
The Importance of Fiduciary Duty
Fiduciary duty is the responsibility of your financial advisor to act in your best interest and not theirs. It is one that professionals within the industry must take seriously. Even an “accidental breach” of fiduciary duty is an ethics violation. It is a considerable honor you’re giving someone when you entrust them with your financial decisions and make financial choices on your behalf. It would be best to choose someone who understands the overwhelming trust you’ve placed in them and honors that trust appropriately.
Understanding Fees and Costs
Financial investments carry costs. Even if you aren’t paying a financial advisor or other investment professional to act on your behalf, there are expenses involved in making transactions, maintaining accounts, and making purchases or investments for your long-term financial health and well-being. Regarding payment for your financial advisor's services, your advisor may prefer hourly compensation, percentage-based payments, or even a “subscription” service to help you make sound investments. It is essential to discuss the fee process upfront and voice any objections you may have. Don’t be afraid to compare costs between investment professionals who offer similar services. Avoid giving in to heavy-handed tactics that rely on strong-arm persuasion to convince you to invest in one service over another.
Choosing an Investment Professional
Before you choose your investment professional, it’s a good idea to do a little homework of your own. You certainly don’t want to give access to your hard-earned dollars to someone you haven’t properly vetted. Consider the following tools to help you choose an investment professional for your financial planning needs.
- Read online interviews and media writeups about specific investment professionals you are considering.
- Assess the candidate’s experience as an investment professional and study their credentials.
- Discuss fees and fee structures with potential investment pros. Then, determine payment structures and requirements and what services they cover.
- Investigate the investment professional for a history of arrests, mainly for financial crimes, ethics violations, and other negative information.
- Choose investment professionals associated with reputable firms.
- Study the firm’s “Relationship Study.” This document provides critical details about how the firm operates, its services, its fees, and other questions about the firm.
Talk to a few investment professionals before choosing one – even if you ultimately choose the first one you interview. Finally, don’t be afraid to trust your gut. If you don’t feel right working with a particular financial advisor or investment pro, choose another one to work with instead.
Working with an Investment Professional
Investment professionals who bring their training, education, and experience to assist you charge for their services. While it is reasonable to pay for their expertise, ensure it is within your budget. Before initiating a relationship with an investment professional, clearly understand their fees and any additional expected expenses.
Before you begin working with an investment professional, it’s a good idea to understand your goals and temper your expectations. Know what you can expect from the relationship and have a realistic understanding of what this professional can do for you.
While you want to trust the professional you are rewarding handsomely to help you manage your investments, you must review documentation immediately to ensure no unauthorized transactions have occurred. Trust, but verify, as the saying goes.
Measuring Performance
The Financial Industry Regulatory Authority (FINRA) provides various tools to assess your investments' performance. Utilize these tools to gauge the effectiveness of your investment professional in steering your assets toward profitability in line with your objectives. The available tools allow you to evaluate yields on bonds, stocks, and CDs and analyze rates of return.
Takeaways
Working with an investment professional doesn’t have to be a terrifying challenge. In fact, in the right situation, it can be pretty rewarding. Just make sure you take the time to do a little research in the beginning to find the right investment advisor to meet your needs and safeguard your financial interests.