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How To Hire an Investment Adviser – What It Will Cost

By Jason Markum

I always thought that I would run my own investments as I got older. I’ve always saved a large part of the money that I’ve ever made because I feel that it’s important to invest for the future. As such, I wanted to handle those investments because I’ve always felt that nobody will be more inclined to make that money grow than me!

In fact many people feel the same way but there’s a problem. Unless you went to college to study finance and economics and investments, and unless you’ve worked on Wall Street for many years to gain experience and expertise, the chances are that any investment you make will fail. That’s just the way our global interconnected faster than the speed of light financial system works today.

The stock market is a zero sum game; in order for somebody to win somebody else has to lose, that’s just the way goes. Small amateur investors like us can’t stand a chance against people who do this full time for a living sometimes 18 hours a day. What chance do we have against somebody who actually lives on Wall Street and is connected straight into the industry in a way we can never hope to be?!

No, the only option the small time amateur investor has is to hire an investment adviser, somebody who works full time in the industry and can look after your investments in the proper professional manner. The only problem is, most investment advisers won’t take a client who has less than $200,000 to invest because otherwise it’s just not worth their time or effort.

If you fall into this category then your best bet is to simply buy a broad stock market index fund like an S&P 500 index fund. Set up automatic contributions on a monthly basis; that way you get to take advantage of the law of averages and you can expect a yearly return of 6% to 8% which is the historic stock market average return.

If, on the other hand, you do have over $200,000 to invest then you may have some questions about hiring an investment adviser For instance what can you expect to pay for such an adviser? That’s what I’m going to talk about right now.

Annual fees for many investment advisers can range from .5% all the way up to 3% of the amount in your account. If you have more money in your account, say over million dollars, then you have more negotiating room to get a lower fee. But if you don’t have much money then you can expect the .5% to 3% range.

Stay away from firms that offer flat fees because you want your adviser to have an incentive to grow your investment as much as possible because the more money your investments make, the more money the adviser makes! Flat fee firms tend to set and forget. That is, they make some investments and then they forget your name.

A good investment adviser is expensive, but they should be because they will bring you higher returns than if you were doing it yourself. If they don’t bring you those higher returns, find a new adviser.

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