Think you’ve got what it takes to manage your own investments? If you’re willing and able to invest the requisite time and energy in learning the tricks of the trade, you might just make a go of it.
More likely, the thought of managing your own money is exhausting, even overwhelming. You’ve got better things—anything—to do than to stare at tickers and pore through prospectuses. Sure, you’ve read insightful investing articles and learned how to talk about money matters without sounding foolish. But you’re not looking to quit your day job and make a full-time job of managing your money either.
The good news: Plenty of investment advisers are willing to manage your money. It’s literally their day job, after all. Here’s what to look for when choosing an adviser for your family.
- Appropriate Licenses and Credentials
Investment advisers are a tightly regulated bunch, but that doesn’t mean everyone who calls themselves an “adviser” is legally licensed to do so. Before you begin your search in earnest, review the licensing and credentialing criteria for registered investment advisers. Conduct a database search with state and federal regulatory authorities to determine that your adviser candidates do in fact have the credentials they claim. While you’re at it, look for evidence of past ethical infractions or sanctions. Be very suspicious of anyone who appears to be misrepresenting their qualifications or experience.
- Suitability for Your Demographic and Professional Niche
Some investment advisers cater to young professionals. Others focus their firepower on empty-nesters. Some split the difference or take a cradle-to-grave approach. Figure out which approach fits your situation and narrow your candidate list accordingly.
- Transparency About Fees and Expenses
You’ve heard the saying, “You need to spend money to make money.” The same logic, more or less, applies to money management. Investment advisers need to eat too, and their work isn’t free.
Then again, it’s the 21st century. You have every right to know how much your adviser charges, or at least his or her fee structure. (It’s not possible to say exactly how much you’ll pay for his or her services, but it’s usually possible to get a clear sense of fees and commissions upfront.) If your adviser avoids discussing how he or she makes money, be skeptical.
- Plain Language
Your investment adviser will probably speak your first language. However, not all advisers speak in plain language. Some advisers fall back on jargon or struggle to explain complex concepts that other advisers can happily translate into clear, understandable (even interesting!) concepts. If you’re OK working with someone you can’t understand some of the time, by all means hire a jargon-spewing adviser. Otherwise, stick with a professional adviser who doubles as a gifted communicator.
- Personal Touches
Successful investment advisers don’t always fly solo, and that’s okay. However, unless you like hands-off service, you probably want to work with an adviser (or advisory firm) that does not treat clients with aloofness. Before you sign with an adviser, make sure he or she—or a trusted associate—will be available when you call.
What’s the most important quality you’d like to see in an investment adviser?