Your Wealth, Health, And Lifestyle Newsletter

How To Hire An Investment Adviser – What To Look For

By Jason Markum

There are not many things in this life more complicated than investing in the stock market. Make the wrong choice and years and years of hard work and savings can evaporate into nothing – instantly. I think that just about everybody knows somebody who has had to put off retirement because their investment account suddenly tanked through no fault of their own.

The fact of the matter is, if you don’t have massive experience and college training in finance, investments, and economics as well as years of experience working on Wall Street itself; then chances are you don’t know what you’re talking about when it comes to investing in the stock market. And that’s no way to plan for the future and invest for your retirement.

So what options do you have? You can’t ask for advice from your stockbroker because they have a vested interest in getting you to buy and sell as much stock as possible because every time you do so they earn a commission; which is just about the only way they make money.

And you can’t take advice off of financial news shows on TV because the people who go on those shows also have a vested interest. Often they buy large chunks of stock, then they go on TV and talk up that stock, then when all the people watching the news show buy the stock, its price goes up, at which time the person who was on TV sells their shares and make a killing.

And you simply can’t get tips from friends because I think we’ve all learned lessons in that area from one time or another!

No, the answer is to hire a professional investment adviser but this can be difficult for many people so I thought I’d offer a few tips on what to look for when you hire one of these professionals.

The first thing you’re going to want to ask about is their performance record. You don’t want just their personal record but the record for the entire firm that they work for and you want it for the entire time that the firm has been in business. If a company’s been around for 20 years but are only willing to show you the last five years of results, that’s a red flag and you should go elsewhere. Compare their performance for every single quarter in the last 8 to 10 years with that of the S&P 500 index. The company should have at least outperformed the S&P 500.

Next look to see if the firm is registered with the securities and exchange commission as an investment adviser You’re going to want to look for the ADV-II form to make sure that the same people working there today are were working there in the past and had success in the past for the firm.

Finally you’re going to want to meet the portfolio manager who will be handling your specific account. All companies are different and you’re going to want to know how the firm makes specific investment decisions for your account whether it will be through the portfolio manager or somebody else.

Also try and get client references if possible and not just for good times. But also get references during times when there were recessions and times were stock market had troubles. Sometimes these will give a better indicator of how the firm actually performs and how its customers view it during those bad times.

So there you have it, several ways for you to find the best investment adviser and know what to look for when searching for one.

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