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5 Tips to Pick Your Investment Advisor

Investment advisors or wealth advisors direct clients on how to save money, invest in a strategic manner, and grow their investments. They can assist you reach a specific fiscal goal—like preparing yourself to buy a house—or give you a larger view of your investment and the interplay of your various assets. Some financial advisors or wealth advisors specialize in retirement or estate planning, while some others consult on a range of financial matters, like investment in currencies and stock market.

But you should never confuse financial advisors or wealth advisors with stockbrokers. Stockbrokers are people who assist you in the process of buying stocks, financial advisors are much more than that. Financial planners also are different from accountants who will lower your tax bill, insurance agents who might lure you in a complex health insurance policy, or the person sitting next to your desk at office, convincing you to buy mutual funds.

From the description, one might have a feeling that investment advisors are a pretty important thing. It is a quite surprising fact that wealth management firms have ecosystems which can be very complex. Almost anyone can call themselves fiscal proficient personnel with just a subscription to any economic newspaper. But how do you choose the right one?

Experts offer these tips in selecting an investment advisor, so you can meet your financial goals:

1.    Think about your goals- It is very important to know early on what you wish to start saving/investing for because that helps decide ones risk appetite to a large extent.

2.    Consider the type of guidance you need- Financial experts can always assist you best when you know what your short and long term goals are.

3.    Factor in your asset levels- A few assets here and there could always come in handy for emergencies and unforeseen circumstances.

4.    Weigh the benefits of investing assistance- Investing assistance often comes at a price i.e. fees for consultation but it is still very small compared to the long term benefits or gains one can incur from sound advice.

5.    Ensure your advisor meets the fiduciary standards- Taking advice from an expert also means that you first and foremost do your due diligence and know if their expertise will truly benefit you or not.

Review your prospective advisor's credentials and experience to learn why that particular person may be uniquely able to help you with your fiscal situation. If you have a lot of outstanding due, for example, you may need financial counselling rather than investment management. The individual investment advisor or wealth management firms or asset management companies must be able to identify your this need and help you however possible.

While some investment advisors may have skill in certain niche clients, the investment advising profession, usually covers a different demographic from those with minimum asset bases to high-net-worth personnel and everyone in the middle. Usually, the clients of investment advisors or asset management companies tend to need or desire a rather more complex financial strategy and skills, like in incentive stock options, firmly held businesses, the application of trusts and more-involved estate planning work. These types of investment advisors also help clients learn how to lower their tax burdens. Investment advisors, as the name suggests, generally offer greater expertise in the league of investment research and portfolio creation.

The fiduciary standard, as administered by the Securities and Exchange Commission, asks for more thorough asset analysis and larger thought-oriented recommendations that are based on your specific investment aims and risk tolerance. Even if an advisor claims to be a fiduciary, ask if they are incentivized to recommend clients to professionals, such as attorneys, accountants and insurance agents. The advisors or asset management companies must work in the clients’ best interest for an efficient flow of work.

Before signing on, one must be sure to understand how often and with whom they will be interacting. Some investment advisors have a preliminary upfront meeting and then check-in with clients annually, while other advisors provide ongoing assistance throughout the year to help with the execution of a plan and to coordinate with other service providers, such as insurance agents, mortgage brokers, and accountants. However, having an investment advisor is not full-proof and you must have proper understanding of the market risks yourself.