Do You Need an Investment Advisor?


If you have considered saving and investing for a certain goal, such as a house, a child’s education, or your own retirement, you’ve undoubtedly wondered the best way to go about it, and whether or not an investment advisor would be worth the, ahem, investment.

What Is an Investment Advisor?

An investment advisor is a person who invests other people’s money (or suggests investments for others’ money) for a living.

An investment advisor is different from a financial advisor in that an investment advisor is only going to advise on investments, not on the rest of your financial situation. If you need an overall look at your finances, perhaps a financial advisor would be a good place to start, followed by an appointment with an investment advisor. One person can be both, but an investment advisor will specialize in investments, whereas perhaps a financial advisor will generalize in a lot of areas.

What Can You Do Yourself?

You can dive right into doing a lot of learning about investments on your own, and you can do much investing online or otherwise, without help. Or, you could hire an advisor with the knowledge who could steer you in the direction you need to go to achieve your desired outcome, knowing that you will be paying this person for his or her advice, but that theoretically he or she will save you much of the time it would take you to get over any learning curve, and potential upkeep of knowledge over time.

Always Question How Advisors Make Money and Their Certifications

All financial and investment advisors need to make money somehow. Some will charge flat fees, or percentages on what they handle. Many, however, will also get kickbacks based on certain products they sell; for example, a 10 percent fee each time they sell a certain investment. This can undoubtedly make someone biased, encouraging them to sell you something that may or may not be the best option for you and your particular situation; that is why it is essential you question how your advisor gets paid and whether he or she receives kickbacks or bonuses on certain products.

According to Dale Walters, CEO of KeatsConnelly, people like that are salespeople, but in the US, registered investment advisors do have regulatory oversight by the Securities and Exchange Commission (SEC) and are required to act as a fiduciary, meaning your needs are to come before the advisor’s personal wishes.

Always ask about your potential advisor’s certifications and who oversees them. In Canada and the US, the Certified Financial Planner (CFP®) designation is used to denote someone who has been certified by the Financial Planning Standards Council, or CFP Board, not-for-profit organizations that develop, promote, and enforce professional standards in the industry.

Where Can You Find a Good Investment Advisor?

Ask family and friends if they have any trusted investment advisors and know that you can “interview” them before you hire them to handle your investments.Don’t sign over your money if you aren’t sure about a person. Take your time and find someone you can trust.

For more about personal finances and investments, see Self-Counsel Press’ personal finance titles

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