Choosing an Investment Professional
Are you the type of person who will read as much as possible about potential investments and ask questions about them? If so, maybe you don’t need investment advice. But if you’re busy with your job, your children, or other responsibilities, or feel you don’t know enough about investing on your own, then you may need professional investment advice. But, beware, choosing an investment professional may be more difficult than you think; when you think Bernie Madoff. There are many investment professionals working who you should avoid.
Investment professionals offer a variety of services at a variety of prices. It pays to comparison shop. You can get investment advice from most financial institutions that sell investments, including brokerages, banks, mutual funds, and insurance companies. You can also hire a broker, an investment adviser, an accountant, a financial planner, or other professional to help you make investment decisions.
Some financial planners and investment advisers offer a complete financial plan, assessing every aspect of your financial life and developing a detailed strategy for meeting your financial goals. They may manage, or receive commissions from the companies whose products or services you are getting, how much they will cost, and how your investment professional gets paid.
In contrast to investment advisers, brokers make recommendations about specific investments like stocks, bonds, or mutual funds. While taking into account your overall financial goals, most brokers do not give you a detailed financial plan. Brokers are generally paid commissions when you buy or sell securities through them.
Brokerages vary widely in the quantity and quality of the services they provide for customers. Some have large research staffs. Others specialize in particular types of companies, for example, companies that are new and have never been in business before.
A discount brokerage charges lower fees and commissions for its services than what you’d pay at a full-service brokerage. But generally you have to research and choose investments by yourself.
A full-service brokerage generally costs more, but the higher fees and commissions pay for a broker’s investment advice based on the firm’s research.
The best way to choose an investment professional is to know what type of services you need. Once you know that ask your friends and colleagues whom they recommend. Try to get several recommendations, then arrange a face-to-face meeting. Make sure you get along. Make sure you understand each other. After all, it’s your money.
WARNING!! Before You Invest Always Check with the SEC and Your State Securities Regulator:
>Is the investment firm registered with the regulatory agency? Go to finra.org/brokercheck
>Is the investment registered with securities regulators? Go to sec.gov
>Have investors complained about the investment in the past? sec.gov
>Have the people who own or manage the investment been in trouble in the past? Go to investor.gov
>Is the person selling me this investment licensed in my state?
>Has that person been in trouble in my state, or with other investors in the past?