The decision to trust someone with your hard-earned money is very personal. And since you’re basically hiring someone to provide expertise that you don’t have, it can be tough to sort the good expertise from the fluff. Whether you’re looking for a financial advisor on your own, or are referred by your loving uncle, consider these five criteria before you begin your relationship.
- Customization. Your needs are unique—and your investment strategy should be too. Make sure your advisor takes the time to understand your personal goals in order to recommend a customized plan that aligns with your risk tolerance.
- Compensation. Consider an advisor who charges a fee for services rather than commission-only from sales of stocks, insurance or other types of investments. This can be an hourly fee, or a percentage of your portfolio. But it helps ensure that he or she is working towards your goals, not profiting primarily from sales.
- Experience. While it’s a good rule of thumb to look for at least three years of experience working as a financial advisor, be sure to ask what type of investing your advisor is most experienced with. If they answer ‘active trading in equities’ and you’re looking for a conservative financial plan (or are about to retire), it may not be a good match.
- Investment Approach. Every investor is unique, so make sure your advisor’s investing philosophy isn’t too conservative or aggressive for your investing style. And be sure to check their assumptions when projecting rates of return; if they seem particularly rosy (e.g., 15% with an inflation rate of 2%) it might not be realistic for the long-term.
- Accessibility. Regardless of how much you have to invest, your advisor should be working with your best interests in mind. If you have questions, your advisor should always be available to give you answers. If they don’t return your calls, it may be time for a change.
If you’re considering a new relationship with a financial advisor, call Magnolia Financial Group at 770-353 -6406 and set up a time to talk with us.