Relationship With Your Investment Advisor

The first step to start saving for your retirement is to put money aside on a regular basis.  The second step is then to decide how to protect  your savings and help them grow.  Most of us rely on advice from others when it comes to this second step.

In today’s world of instant access to information via 24 hour money TV, the internet and the numerous opinions by financial “experts”, it become easy to get overwhelmed.  I find that there is often conflicting points of view from different experts which tends to confuse if the most savvy investor.  What’s a person to do?  My suggestion is to seek out professional advice.

Types of Investment Advice

There are different types of investment advice.  You can find free advice from an employee of a financial institution.  You can pay for advice from a stock broker who charges a commission per transaction, a kind of pay as you go service.  Other securities brokers charge a flat fee based on the assets under management, whether you are getting advice or not.  On the other hand, the broker makes more if he helps you grow your assets.  Then you have the multitude of advisors who get paid commissions based trailer fees from the investments you bought from them.  These advisors may work for financial institutions such as banks, credit unions, insurance companies or independent firms under less commonly known names.

Quality Investment Advice

Now that you know that there are many different types of advice available you should seek out quality investment advice.  Sounds simple, how do you do this?  Meet people, ask questions, talk to those in your network of contacts, get a feel for what you want from an advisor get a referral if possible.  Whatever happens, the most important aspect to determine the quality of advice is to feel comfortable with the person you are dealing with.  The world of investments and money attracts all sorts of people.  Your relationship with an investment advisor should be one where trust and confidence come before all else.  Your perception of the Quality of advice received should be based on your level of confidence and trust that the advisor has earned.  They should get there by learning your needs and priorities first so you can sleep comfortably at night knowing that your savings are protected.

Investing Warning Signals

You probably already know these but they beg to be repeated.

If it sounds too good to be true: Run for the hills!  Hiring a pro who promises amazing results usually doesn’t help. A research report produced by Morningstar analyzed investor returns of institutional funds and funds sold with sales charges, both of which are typically purchased with the “help” of advisers produced roughly the same results as individual investors who usually buy no-load funds on their own.

Don’t buy anything you don’t understand.  If you are not sure, take the written information regarding the advice, preferably a prospectus, and get a second opinion.  This can be a good way to sense if your advisor will “lose out” if you don’t buy.  Again, you are looking for advice to help you protect and help grow your savings.  These should become your advisor’s priorities as well.  Any signs of pressure should be clues to look elsewhere.

Lastly, ask your advisor to explain how he is compensated.  If his explanation is not clear, if efforts are made to change the subject, if he is evasive, look out: your best interests may not be shared by him.

Start Saving for Your Retirement

Begin with a periodic savings plan to pay yourself first.  Once you have started to put money aside on a regular basis, Take Responsibility for Investment Returns.  Find an advisor to with whom you feel comfortable to decide how to protect  your savings and help them grow.

How is your relationship with your investment advisor?  How did you find that person?  What type of advice serves you best?  We would love to hear from you.

Author: Robert

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