Unless you were either raised and taught how to manage and grow your own vast empire or obtained an education in finance, chances are you cannot manage your finances as effectively as a financial adviser. That said, many financial advisers become financial advisers as a result of wanting to switch careers. Upon switching careers, they obtain internal training from financial advising companies seeking people capable of selling financial investment packages.
Unless your financial adviser has a Series 7 certification, you are not getting effective financial advice. You are likely simply dealing with a salesperson who recommends investment products. Furthermore, even if your adviser has a degree in finance or a Series 7 certification, there are many differences in people’s ability to do a good job–let alone a fantastic job.
1. Advises you on a path that meets your goals
Your adviser should not simply tell you to cut spending and increase savings. Instead, your adviser should be knowledgeable about all the financial vehicles at the company’s disposal and be able to offer recommendations about which ones perform better over different periods of time.
Additionally, your adviser should be able to match those vehicles with your comfort level, otherwise known as your risk tolerance. Finally, your adviser should be able to provide you a portfolio made up of quality investment opportunities that combined provide you a high degree of probability of reaching 70 percent of your goals.
2. Discusses risk
Because investing always carries with it some degree of risk, your adviser should discuss with you all the types of risk involved with different opportunities. For instance, your adviser should be able to tell you all the risks associated with companies in a bond as well as the risk associated with putting your money into one or two stocks.
For instance, advisers at TradeRisk Insurance discuss with you the risk associated with different types of investing. In fact, any quality adviser should also be able to discuss with you the risk of various industries as well as the risk associated with historically safe investments, such as municipal bonds. Municipal bonds, for instance, are typically very safe. That said, Detroit and other large cities have gone bankrupt. In doing so, much wealth and security vanished.
3. Listens to your needs
Your adviser should be less concerned about selling your investment opportunities and more interested in educating you. With education, you are able to make your own decisions, and a financial adviser should be able to process the transactions that you direct. If your adviser, instead, simply sells you investment packages laden with high fees, you should take your business elsewhere.
4. Has an online portfolio that has done well historically
Your adviser should be able to show the results of his or her investing acumen. In the same fashion that artists have galleries and IT professionals have programming portfolios, your investment adviser should have a portfolio that has outperformed the market. Additionally, he or she should come highly recommended by other professionals in his or her field. For instance, prior to the Bernie Madoff scandal being uncovered, there were already colleagues of Madoff trying to understand how his investments were so successful. As skeptics, these people steered their clients away from Madoff, saving them from losing a lot of money.
In a tight-knit community, financial advisers typically want their clients to do well and they will recommend other proven advisers.
5. Your advisor knows when to say no
Your adviser should be able to tell you when something that seems too good to be true is actually too good to be true. As such, he or she should steer you away from get-rich-quick schemes and instead help you stick to proven investment strategies that will keep your money safe and your revenue-growth projection on track for your retirement and other goals you might have.
6. They work full-time
Your financial adviser is likely a top-notch adviser if he or she works full-time at his or her job. If you find someone who works part-time, you should be wary. Part-time advisers might have talent, and they might have some experience, but the truth of it is that they are learning. As such, you do not want to train them through all the mistakes they are guaranteed to make. Let someone else train them. Better yet, let them prove themselves on their own money and develop a history of higher-than-average earnings.
7. They can steer you through the expensive red tape
An adviser who knows the best financial packages will be able to steer you away from up-front and back-end fees. When two investment opportunities perform roughly the same, your adviser should be able to direct you to the one that costs you less.
