How Can You Determine Whether Your Advisor Is Good?

Do not be afraid to ask questions – find out everything you can about a financial advisor’s experience and credentials before appointing them to handle your money.

Everyone who dispenses advice is not necessarily a credible financial advisor. There are many people who are ill-informed about the products and yet portray themselves as financial advisors. Some supposed financial advisors dispense suggestions based on what earns them the most commission and not based on what?s best for their clients. At the same time, it is important that investors not completely write off advisors and that they take expert recommendations to manage their funds better.

Thus it becomes imperative that any investor makes sure that their advisor is really the expert that he is purporting to be. How do you go about finding that out? The simplest answer – ask questions. Find out as much as you can about the advisor before you invest your money with them. Ask them about their experience – not just in terms of years but also about the kind of experience they have had. Someone might tell you that they have 15 years of experience in the industry but most of that time might have been and still be about selling insurance products. An insurance agent might not know about the dynamics of the market, be able to predict how the markets will pan out, or be able to recommend the right products that match both the investors? risk and return appetite and the future market expectations.

Ask for information on their clients – the kind of clients they have had and the amount of money they have handled for those clients. Also, see if you can get a couple of client contacts and talk to them. The clients of the advisor are probably the best source for determining how credible the advisor is.

Finally, see if you can determine the commitment of the advisor. You do not want to hand your money over to someone and then have him disappear. Having a financial advisor is not a one-time transaction. It is a life-long relationship. A good financial advisor is someone who keeps an eye on your investment and holds periodical meetings with you to discuss the performance of your investment and to re-evaluate your financial goals.

A good financial advisor is like a family physician. A good family physician would drop into your home, when in the „neighbourhood?, even without anyone calling for him, because he cares about his clients and wants to make sure everyone is doing well; a good financial advisor is similarly, the physician for your investments and your financial goals.