Nov 27 2012
Selecting a great financial adviser can be one of the best investments you can make. Read the following article to gain tips on selecting a financial adviser.
How To Choose A Great Financial Adviser
Written by Paul Merriman. Please visit marketwatch.com to read the entire article.
Financial advice isn’t free. If you have a financial adviser, one way or another you will pay. However, if you use your adviser wisely, you can get far more than your money’s worth.
I believe every serious investor should work with a professional adviser for at least one year. That’s enough time to tackle most of the big financial decisions you’ll ever have to make, although you will probably need to revisit some issues from time to time as your life and your circumstances evolve.
If you are not currently working with an adviser, you may be thinking: “Why should I pay for somebody to help me do what I’m already doing just fine on my own?” That is a valid question.
In my latest book, “Get Smart or Get Screwed: How to Select the Best and Get the Most from Your Financial Advisor,” I mentioned more than 40 valuable services that a good adviser can provide. For example:
A great adviser will help you focus on defense as well as offense, making sure you understand and can deal with the amount of risk that’s involved in your investments. Even though you may not want to hear it, a great adviser will tell you, if necessary, that you need to save more money and invest less aggressively.
Just about any adviser can help you determine the proper mix of stock funds and bond funds. A great one will also help you maximize your expected returns by using the best low-cost funds in each asset class.
A great adviser will help you make the right choices with investments that he cannot manage directly, such as a variable annuity or your 401(k) or similar retirement plan. Some advisers charge for this service, while others don’t.
Your adviser can help you initiate the sometimes-awkward discussions you should have with your children, your parents, your spouse or other relatives concerning wills, health-care issues and finances. These conversations can be extremely important, but too often they never happen because people don’t know how to go about it.
A good adviser can help couples negotiate their spending levels before and after retirement. Very often, one spouse is more of a spender and the other is more a saver. Over the years I helped many couples find solutions that preserved their financial viability — and their relationships.
Your adviser should get to know and gain the trust of your spouse, your partner or your grown children so they understand the plan behind your investments — and so that your adviser can help them after your death. This can be especially valuable to survivors who do not know a lot about investing or who may not be comfortable taking charge of financial assets.