Text A

Hiring a Financial Advisor

If you are one of the many self directed investors who get that sinking feeling when your brokerage statement comes in the mail，it might be time to consider hiring a financial advisor.It has been years since the“dot.com”bubble burst，the housing market imploded and the global recession started.While the markets have been able to come back and hit multi-year highs，the economy continues to struggle and experts remain divided on whether or not the recession ended.So what's next？For most people，the facts leave them in a constant state of confusions and worse，many people find themselves second guessing some of the investment decisions they've made or are about to make.The worst situations many people find themselves in are a state of“decision making paralysis”and do nothing for fear of making the wrong decision.This path will almost always lead to guaranteed failure.

So，what can a financial advisor do for you？

Benefits of hiring a financial advisor

First，the financial advisor will get a copy of your statement and even if you won't look at it，they will.A good financial advisor will be proactive and reach out to you with good or bad news，strategies and ideas.This work behind the scenes is part of the many reasons why financial advisors cost money and a good one should be considered an investment rather than an expense.They are often the difference between your financial success and failure.Investing is not a get rich scheme and it takes time，patience and dedication to be successful.

Second，one of the roles a financial advisor assumes is to reduce your financial stress and make the load lighter.They will help you simplify your financial options and sharpen the focus on your short and long term goals.They are there to help you avoid making costly mistakes by challenging your thinking and holding you accountable.The advisor should make you smarter and help you focus on the facts rather than the sales pitch.

Third，a good financial advisor will provide you with expertise and knowledge you may not have.Gamma，Beta，Standard Deviations，risk weighting and P/E ratios are all concepts that many people haven't looked at since the SAT's.However，an advisor will take the time to sit down with you and explain what they mean to you and how they may impact your investment portfolios.These types of discussions with advisors help people avoid taking unnecessary risk and focus on their long term goals.

Additionally，an advisor will work with both your estate planning attorney and CPA to help reduce taxes，avoid taking unnecessary risks and protect the things you've worked so hard to accumulate.There is a synergy between these professions and each have an impact on your overall financial health and future legacy.By hiring a financial advisor，you will be hiring a personal advocate focused on pursuing your best interests.Afterwards you can focus on the rest of your life and make it more enjoyable.

Common mistakes in picking a financial advisor

Hiring anybody to do anything is always tricky because you find yourself having to predict the future and how that person will perform in it.In addition，there's always a judgment call that has to be made while evaluating the integrity and honesty of the person you hire.But selecting a financial advisor is even trickier because the stakes are much higher.For example，if you hire a plumber and he doesn't work out，you pay him the agreed amount and move on with your life.But if you hire a financial advisor and he doesn't work out，then not only do you have to pay the agreed fee but you also have to deal with the fact that your life savings or retirement fund may have been jeopardized.Therefore，selecting the best possible financial advisor is much more critical because you are giving that person access to your finances.

However，many people further reduce their odds of finding a competent financial advisor by not gathering enough information and by making the following common mistakes.

·Cutting corners and not putting enough effort into the process

People tend to take the process too lightly.There are a number of steps in this process（e.g.identifying your needs，researching different advisors，checking references etc.）and each one of them is time consuming.But in the long run，it's time well spent not only because finding the right person can help you achieve your goals but also because finding the wrong person can cost you a lot of money.

·Relying solely on recommendations from friends or family to make a decision

Everybody's financial situation is unique，so an advisor who worked well for somebody might not work well for you.

·Not understanding what kind of advisor you are looking for

There are numerous types of financial advisors out there（e.g.brokers，fee-only planners，feebased planners，comprehensive planners，tax advisors，estate planners etc.）and people tend to assume they are all basically the same.That is not the case.If you just want tax advice，don't go to a broker just because he calls himself a financial advisor.

·Confusing salesmen with financial advisors

Salesmen are typically individuals who work for brokerage houses.Often their primary job is to sell stock.They tend to call themselves financial advisors but they are not usually registered as investment advisors，which means they do not have a fiduciary duty（that is，a legal obligation）to do what's absolutely best for you.

·Not understanding what fee structure you will be paying

For example，paying a financial advisor a commission every time you purchase or sell a stock is not the same as paying an advisor a fee based on assets under management.In the former，the advisor makes money no matter whether your investment goes up or down but in the latter，the advisor makes a lot more money when your investment goes up.Therefore，the advisor's interests are more aligned with yours.

·Not researching an advisor's background to check past disciplinary actions；Not spending enough time judging core competence

An advisor can charge the right fees and have the correct licenses but if he is not good at his job，there is no point in hiring him.Therefore，people should take the time to gauge whether the advisor knows what he is doing and has a sufficient level of expertise.One way of judging this is looking at the past performance of the advisor，especially in bear markets（everybody can make money in bull markets）.

·Not evaluating investment philosophies and risk tendencies of an advisor

People need to make sure that there is a good fit between their and the advisor's investment style and tolerance for risk；otherwise，the relationship can turn out to be frustrating（and expensive）.

·Putting too much emphasis on an advisor's personality

Don't hire an advisor just because he is personable.Some financial advisors are especially good at coming across as friendly because that is part of the sales process，but that's not the most important consideration.

How to find the right financial advisor

Financial advisors are everywhere！They are on television，advertised on the radio and in magazines.They even knock on your door with pamphlets about how great they are while trying to get an appointment with you.They will hand you a business card with enough acronyms after their name to make a military acronym generator jealous.Financial advisors are even in the bank branch of your local supermarket between the latest and greatest display of chips and the dollar discount aisle.The point is you don't have to go very far to find people who would like to manage your money.But the real question is how to find one that is right for you？Do you ask the richest person you know for the number of his broker？Do you ask your brother-in-law，the lawyer？Do you ask your CPA，your insurance agent，or your banker？The short answer is，yes to all！

Finding the right financial advisor is more like putting together a 5，000 piece puzzle than fitting a glass slipper.Take the time to roll up your sleeves and get on paper a realistic view of where you are now and a list of milestones you would like to achieve over your lifetime.The purpose of this exercise is to develop the framework of needs and wants.It helps narrow what type of financial advisor you need as well as shape the interview questions.The important thing to remember is it is not what they are called but what they do with your money.Interview a minimum of three potential advisors and always ask for a referral.Any advisor who is not willing to provide a referral isn't worth your time.If you have worked with a financial advisor in the past，take some time to reflect and determine the strengths and weaknesses of the former advisor.What did they do well？What would you have liked to have seen more of？And what didn't they do well？This type of preparation will help you quickly gauge advisors that may be difficult to work with or do not meet your needs.It is also a signal to the potential investment advisor that you are serious about your financial future.

Just as you have your requirements，a financial advisor has theirs too.Some advisors have minimum account requirements and provide different levels of service based on the size of the account.Some work on a fee basis and others work on a commission basis.It is important to know how the relationship is going to work up front.

As mentioned above，financial advisors are everywhere and they will often find you before you find them.Being prepared and ready to weed out the facts from the sales pitch makes you a more informed investor，a better client and the CEO of your money.

Good luck and happy hunting！

（1667 words）