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How To Find The Right Investment Advisor For Yourself?

Investing is a crucial part of financial management but at times can be quite risky. If you are a no nothing investor or if you have a low-risk appetite, you might have to consider finding an Investment Advisor for yourself. Finding the right adviser is not as easy as it sounds. Your adviser must be competent enough to understand your financial goals and advise accordingly. So how exactly can you find the right Investment Advisor?

Well, here’s how to find the right Investment Advisor

Investment Advisor
Picture Courtesy – ABC

What Type Of Advisor Do You need?

First things first, determine if you need a human financial advisor or Robo advisor like a financial advisory tool. Sites like SBI India can be really helpful to guide you with your finances. You if you are a salaried individual and planning to invest, it is a wonderful

call. But in most cases, a financial advisor may not be as interested in a salaried profile. Hiring a financial advisor can cost you a lot in such cases. If you can pay at least 20% of your annual income, you can surely consider one. If not, Robo advisors or websites like SBIS India can be a more suitable alternative for you.

What Type Of Financial Advisor To Get?

There are primarily two types of financial compliances that the advisors follow, namely –

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Fiduciary Standard

The fiduciary standard is a legally binding contract where your financial advisor is lawfully bounded to put your interest before his and act in your best interest.

The Fiduciary advisors are also known as Fee-Only advisers since they do not work in the commission model and do not accept any commission whatsoever from the recommended source. They are usually paid some per cent of fiduciary fees in accordance with your assets they manage.

Suitability Standard

The Suitability Standard operates on a commission model. They are not legally bound by any specific clause other than recommending a suitable investment. These recommendations may not necessarily be the best for you in all cases. Any advisor functioning on the suitability standard can incentivize their recommendations and charge a sum of amount from the investment body.

Check The Advisor’s Credentials

There are a number of free tools where you can check an advisor’s credentials. These websites can give you a detailed report of the background of any advisor or advisory firms and their previous experiences, even of the Robo advisors. Most importantly, they can display a history of disciplinary action that has been taken against the advisor, if any.

Interview A Number Of Investment Advisor

Do not settle with the first Advisor you talk to. Talk to a number of advisors before hiring one. Before finalizing an advisor, ask him about his previous client experiences, mode of communication and how often would they communicate with you, and their success report.

Also, be upfront and clear with what you bring on the table and make sure you clearly communicate your needs and preference and the advisors too. If you are looking for a certain level of experience or certifications in an advisor, you can consider narrowing your search. You can look up an online database of financial advisors.

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Word Of Mouth

In case you are having a hard time finding an advisor for yourself, you can also ask your friend, family or acquaintance with similar financial background for recommendations. There is a high possibility of finding an experienced advisor in your circle.

However, Advisors more often confine their expertise to one specific field so your Richie Rich uncle’s financial advisor may not be the right fit for you especially if you have just started investing.

A Financial Advisor Search Tool

There are hundreds of financial advisor search tools available online. There is no physical hassle required and it is much more feasible than the previous modes. All you got to do is answer a few questions about your financial background and situation.

You will also have to answer a bunch of questions related to personal preference. According to these answers and preferences, the tool will match you with the best three advisors near you.

How to Choose a Good Investment Advisor

Now that you have narrowed down your search to the said criteria, it is time for you finalize an Investment of Advisor. Interview the list of your chosen advisors by asking them the following questions –

  • Are you a fiduciary?
  • What certifications and experience do you have?
  • Do you have any disclosures?
  • What services do you offer?
  • What are the types of clients that specialize in?
  • How do you make money?
  • What’s your investment philosophy?
  • How often do you communicate with your clients?

In addition to these interview questions, you can also ask questions suitable for your profile. You can usually find most of these pieces of information on a firm’s filed paperwork. You should also ask the advisor for the relevant paperwork before finalizing one.

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Be picky since you are entrusting the advisor to invest your hard-earned money. Never finalize an advisor unless you are completely satisfied with his profile and can envision yourself working with you on a longer run

How To Find The Right Investment Advisor For Yourself? 1

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