Finding a Financial Advisor

Part of the Asset Allocation For Dummies Cheat Sheet

If you need investment help, shop around and come up with a list of potential financial advisors. Plan on meeting with two or three advisors so you can interview and evaluate them and find the right fit for your needs. Don’t hesitate to ask tough questions to gauge their investment expertise — the best financial advisors will welcome your questions and honestly share their responses with you. Try these questions to get started:

  • How did your clients do in the last down market? Everyone’s a genius in a bull market, but how did the advisor do when times got tough?

  • Can you describe your investing approach for me? The answer will tell you the firm’s investment philosophy. Don’t hesitate to ask for details.

  • Are you sensitive to taxes? You want an advisor who tries to maximize your after-tax results. It’s not what you make, but what you keep, that counts.

  • What do you invest in? Look for a firm that provides you the most choices and flexibility (a mix of assets like mutual funds, individual stocks, bonds, and exchange-traded funds).

  • Where will my assets reside, and how are they protected? Most firms house their clients’ assets with a custodian. Ask the firm if its custodian is a member of the Securities Investor Protection Corporation (SIPC), which provides limited protection for consumers if the custodian goes under, and if the firm and its custodian have other insurance, to provide additional protection.

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Asset Allocation For Dummies Cheat Sheet

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