Choosing a Financial Advisor


If you have made the decision that you want to hire a financial advisor, there are some items you might want to consider before you select the candidate.

Firstly, think about what you hope to accomplish. Obviously, you want to make your money grow. However, you should also consider the need to protect your capital investment, and the time line for the investment. Further, you should consider whether you will be adding monies at a particular time interval. How much can you initially afford to invest?How do you envision the role of the financial advisor? In other words, depending upon your level of sophistication, you may want your financial advisor to make all decisions on your behalf, or you may want to limit his/her role.

Do you want a financial advisor who is affiliated with a financial institution, such as your own bank, or are you really looking for an independent stockbroker? As well, research the minimum credentials that your financial advisor should possess.

To find a suitable candidate, ask your family and friends for positive referrals. It is especially helpful to ask persons who have a similar portfolio, and goals, to your own.

Request an interview with suitable candidates. Consider their presentation. Is he/she professional in their approach? Does their style of communication mesh with your own? Do you feel comfortable to trust the candidate with personal details of your life? Having said this, it is not necessary for the candidate to be apprised of your entire financial picture.

Learn about each candidate’s experience in the industry, their administrative support and network within the community. Ask each candidate about their protocol for providing you with regular reporting, feedback and adjustments to your investment portfolio. Finally, you will want to know about whether the candidate has sufficient time and energy to devote to your account and respond to all your questions, even if your account is smaller than his/her average.

Performance is a key factor in selecting a financial advisor. You want a candidate that has a track record for producing satisfactory returns. In this regard, you might want to try investing a smaller sum in the beginning, to test the candidate’s performance. Be realistic in your expectations regarding performance. Ask the candidate what they anticipate as an annual return, given your investment parameters. If your investment does not perform satisfactory, there should be an adequate and understandable explanation.

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