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Hiring An Investment Adviser – Debunking The Myths

By Jason Markum

Investing in the stock market is nearly impossible if you don’t have a background in finance. You’re also going to want a background in economics and a specialization in investments. In fact even if you have training in all of these things, you also need professional work experience in the industry for many years in order to become good at.

Most people don’t have any of this. We don’t work on Wall Street and we weren’t trained in economics or finance; we are doctors and dentists and lawyers and steel workers and teachers and sanitation workers and whatever else, so what are we supposed to do… how are we supposed to invest wisely safely and securely for our futures?

The answer is to hire an investment adviser Now most investment advisers will not accept a client who doesn’t have at least $200,000 to invest. If you haven’t reached that threshold yet been your best bet is to simply invest in a broad stock market index fund such as an S&P 500 index fund. The trick is to make automatic deductions every single month straight from your paycheck into your index fund account. This method lets you take advantage of the law of averages and will ensure that you receive between a 6% and an 8% investment increase year after year because this is the normal return on the broad stock market on a yearly basis, historically.

But say you have reached a $200,000 mark and you are ready to hire an investment adviser; then you need to understand several myths that go along with it to clear up your disillusionment before hand.

The first myth is that you will have a custom designed portfolio done by your adviser for you specifically. The reality of the situation is that most of these firms have 100 to 200 clients per investment adviser and they simply don’t have the time to create specific portfolios for each customer so what they generally end up doing is creating a handful of specialty portfolios to handle a broad range of clients and you will get one of these hopefully one that is best suited to you.

The second myth is that you will receive personal attention. These people don’t have a lot of free time to speak with their customers and in fact have way too many clients to contact them all personally very often. At the most you can expect to hear from them once quarterly, if that often. Also you can expect to meet face-to-face with them once a year to talk about the new year and make any changes that are needed.

The last myth is that your existing portfolio will be scrutinized closely. When you hand your portfolio over to a new adviser he or she is going to run through and look at it very quickly and if they notice any of the stocks that they follow actively, they may keep them. If not; he or she is likely to just sell them and move on. If you don’t want those stocks sold then you shouldn’t go to an adviser to begin with.

Well, there you have several myths about investment advisers that have been thoroughly debunked. Now you’re ready to go out and find yourself a good adviser and you’ll know exactly what to expect.

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