How to Find a Good Financial Advisor


I am not a financial advisor, as I say in my disclaimer – just an experienced investor willing to share from my experience.  I also think that a lot of people can invest without a financial advisor – it just really isn’t that hard if your read a little, particularly if you use mutual funds.  There is other advice, however, such as tax planning, insurance, and estate planning for which a financial advisor would be invaluable.  Also if you are really not comfortable with investing and would like some experienced help, a financial advisor would certainly not be a bad thing.

In finding a financial advisor, particularly to find one to help you invest in stocks, here are the things for which I would look:

1) In general, find one who charges a fee per service, rather than a percentage of assets or some other system.  There would be a fee for each consultation, perhaps a fee when he does things like helps set up or manage the portfolio.

2) Find an advisor who recommends trading infrequently.  Good investing does not involve jumping deftly in and out of the market.  It involves creating a plan of regular investing and sticking to it.

3) Find advisors that advise using normal stocks, ETFs, and no-load funds.  Some advisors make a commission from fund companies to sell products with big sales loads that typically are loaded with fees.  There is little reason to buy funds with sales charges and loads – there are too many good ones that come for free.

4) Find an advisor who is willing to teach you, rather than just do things for you.  A good financial advisor will want to teach you to be a good investor.

5) The investing style should be age-appropriate.  If you are young, he should recommend mostly stocks (although if you are very risk-adverse, he may recommend a higher bond mix).  If you are nearing retirement, he should be recommending more bonds and fixed-income assets like high yielding stocks (for example, utilities).

6) If you are looking to invest in individual stocks, find one who has experience investing in individual stocks.  In picking stocks, he should be looking at things like earnings growth, financial stability of the company, return on equity, and so on.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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