What should you know about your financial and investment advisors before you commit to investments? that good expert advisors can make all the difference in making sound and profitable investments. Not to mention they can save us a ton of time. Of course, it’s incredibly easy for anyone to hold themselves out there as an expert today. They can just land a job at a big firm or franchise, or throw up a website and post photoshopped pictures on the internet.

So, what should you know about an adviser before letting them handle your money?


Transparency: What Do They Invest Their Own Money In?

What are they doing with their own investment capital? Are they really investing in the same or similar investments to those they are promoting and recommending? Or are they doing something else altogether? An experienced financial advisor will volunteer this information as it will help you to make the right decisions.


Compensation: How Are They Making Their Money?

How are they earning and getting paid? Wise individuals don’t have a problem with valuable advisors and professionals making reasonable compensation for doing a really great job. Yet, how their earning can make a big difference and will tell you a lot about what to expect. Are they just making money on advice or actually making the same investments as they suggest you do? Are they making all their money upfront, regardless of how your investments perform? How does their compensation motivate them to perform for you and keep your interests aligned? For example; are there reasonable fees upfront, in the middle as the investment performs and on a successful exit?


Track Record: How Successful Are They?

How successful are they with the recommendations they are making? Are they seeing the same proclaimed performance? Are they buying more or selling? What does their portfolio performance look like? If the advisor suggests you put your money in a retirement investment vehicle, they will provide documentation for their historical returns, based on industry-accepted methodologies. Ignore distractions like sporty cars, fancy houses, the suits and glossy materials. Performance is what matters.


Motivation: What Drives Them?

Knowing what drives them will indicate a lot about what you can expect ahead. Are the fees hourly, fixed or asset-based? Is it a charity or cause they are passionate about? The best financial advisors are compensated with fees, similar to attorneys and CPA’s, so make sure your preferred method of payment lines up with theirs.


Financial Expertise: Where Are The Areas of Their Expertise?

Are they only experts at selling and acquiring new customers? Or are they experienced and skilled in asset management, unlocking asset value, exits, or leasing and building industry contacts, like big tenants? Select an advisor who can prove he or she is a real financial expert based on relevant education, experience, and certifications.


Many investors believe being a fiduciary is an important characteristic for a financial advisor. Fiduciaries are held to the highest ethical standards in the financial service industry. Only RIAs and IARs are financial fiduciaries, so select a fiduciary advisor if you want a professional who is required to put your financial interests first.


Communication & Financial Services: What Can You Expect?

First impressions are important and typically the service won’t get any better than it is up front. If you aren’t getting swift responses and good service before you engage, don’t have big hopes that will change after you invest. Look at online reviews, ask for references, and talk to others to see what the service is like after the initial investment. The best financial advisors will provide the information you need to get a good night’s sleep on a regular basis.


It is always wisest to get expert help from a professional investment advisor when looking to make new moves with your capital and portfolio. It’s easy to look and sound good today. What investors should be looking at is how things are likely to perform after they invest. Knowing these six things about your investment advisor can really help in making the best choices.

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