At the Compass Investment, we’re empower investors helping you take control of your finances and future. While you’ve probably read that it’s smart to manage your own finances, it’s actually a good idea to consider getting some help. You hire an attorney when going through a divorce because you don’t have the skills to handle it yourself – so why not hire a financial advisor if you don’t have the skills to totally handle your money?
Today we’re going to take a look at some of the questions you need to ask any prospective financial advisor you’re looking to hire.
Who will be managing your investments? If they’re a genuine financial advisor, they’ll keep your funds in a discretionary account and will conduct transactions without your trade-by-trade approval. Be wary of investors who claim to manage your money but really just act as middlemen between you and another financial advisor who is actually doing all the work.
What is the financial advisor’s track record? Ask for a copy of their Form ADV. This will disclose any possible conflicts that are arising from securities trades and will also answer a lot of other questions you’ll have. You should also ask for a risk-adjusted performance record that goes back at least 5 years – and get this in writing! You should also obtain and call a list of references.
Ask what their background is, too. If they’re a genuine financial advisor, they likely have an advanced degree in business or finance (or both!) and years of experience. Be wary of advisors who don’t have any or very little experience.