Whether you are new to the world of investment or have built up an extensive portfolio, it is essential to research an investment advisor to verify credibility before providing him or her with access to your finances. While an investment advisor may look reputable on paper, it is essential to do your own research. Do so by taking these three steps to ensure the investment advisor you are considering has the knowledge and experience necessary to meet your individual needs
Determine Which Agency the Advisor Works With
Every investment company is overseen by either the Financial Industry Regulatory Authority or the Securities and Exchange Commission. Some companies may work with both entities. Regardless of which corporation oversees your advisor’s business, you can check with its website to see if any complaints have been filed against the advisor. Advisors who are not registered with either of these companies should not be hired because this indicates that they are not reputable.
The FINRA and SEC websites are effective tools to help you learn about investors. Although complaints are sometimes buried, they will show up on these two websites so you can determine if the advisor you are considering is trustworthy. Whether you intend to entrust the advisor with your entire portfolio or only a portion of it, you need to ensure they do not have a history of mishandling your finances.
Look Up Client Reviews
In addition to checking the professional reputation of investment advisors, you should also research client reviews. You want to know how well advisors communicate, how personable they are and how knowledgeable they are about the industry. While professional associations help you verify credentials, client reviews often offer better insight as to how an advisor operates.
You may want to hire someone with great communication skills who can explain financial concepts that are difficult to understand if that is not an area you are comfortable with. In contrast, if you understand the investment industry, you may focus on finding an advisor who is highly skilled in choosing companies for you to invest in. Client reviews can help you determine if an advisor meets your specific needs. Reading reviews is also an excellent way to gain an accurate understanding of how the advisor handles the finances of clients from all social standings.
Verify the Advisor’s Designations and Credentials
All investment advisors have a list of their credentials. Before deciding to hire an advisor, you should verify those designations by searching the advisor’s name on Investor.gov. This website pulls up a comprehensive list of credentials and what they mean so you know if your advisor is certified to make investments in your area of interest.
Unfortunately, there are dishonest advisors out there who list incorrect credentials. Because of this, it is especially important to verify that the designations listed are the ones actually held by the advisor. Once you have verified these details, you can be confident that the advisor has the experience necessary to represent your financial interests. Failing to ensure that these details are accurate could lead you to hire someone who is not reputable and devastate your portfolio.
Your financial portfolio is an important asset, so you do not want to entrust it to someone without an impeccable reputation. You want to be sure to hire someone who has a comprehensive understanding of the industry and can accurately represent your financial interests. This can be done by taking the time to verify the advisor’s credentials and reading client reviews. Knowing that your finances are in good hands will give you peace of mind, so it is essential to do a significant amount of research before hiring an investor.