Financial Advisors and Tips for Who to Work With
The role of an investment advisor is still a necessity for most households. This is good news for sales people working for investment firms, and as the market continues to gain from its depressed levels, financial advisors are going back to work. The important thing for investors is – to work with a knowledgeable advisor that has a track record of making money.
Financial information, such as frugality and money saving tips, are simple enough to be understood by anyone and are easily applied to everyday life. However when you look into more complex financial situations involving various types of insurance and investments, a knowledgeable financial advisor can make the difference between barely retiring or retiring in style. There are several options when choosing an investment advisor. You can work with a fee-based or commission-based advisor.
Here are the benefits of a fee-based financial advisor:
- Fee-based advisors are not salespeople. They don’t need to “sell” you anything. This means that you don’t have to worry about their advice being tied to the amount of money they could make by offering a particular investment. Their advice will be based on the benefit to you, without contemplating the benefit to them.
- They will explore your options. Without the financial incentive of commission, a fee-based advisor is much more likely to make you aware of ALL your financial options. Furthermore, they will also explain to you the details of each alternative and how they directly associate to your own personal needs.
- Promotion of self-reliance. A good fee- based advisor will not only offer to manage your finances, but they will give you the knowledge and tools you need to manage them yourself and become more self-reliant in the future. (Because they have no incentives towards making a commission, they only have a financial incentive to give you the best possible advice and answering your questions.
- Good for large portfolios. If you have a lot of money to invest you can save by working with a fee-based advisor that won’t take a slice of your financial pie.
A commission-based financial advisor is a good fit for investors that like:
- Aggressive. A commission based advisor is aggressive and fights for the sale because that is how they earn a living. If they don’t invest money, they don’t make money. You can be sure that this type of advisor won’t be staring at Facebook for hours while collecting a fee. They are motivated to work in order to survive.
- Saves Money. If you have a smaller portfolio, and don’t want to tap into your personal cash flow, a commission-based financial advisor will work for you without payment. They get paid based on your investments so you won’t be writing them a monthly check.
- Confidence. If you find the right commission-based advisor they will have high confidence levels in what they can do for you. Their success is tied to yours. The key is to make sure that they are a success. A commission-based advisor that is barely making it is not the best manager of your funds.
It is also important to do your own research before investing, and to compare the information you find with the advice you are being given. The greatest outcome is that you feel knowledgeable and assured enough to make your own financial decisions with the advice you are being given.