Now that you’ve received your list of SmartVestor Pros, what is the next step to finding a pro who is right for you? These questions will help you know what to look for when you talk to any investing professional in your area.
When asking questions, explain that you are honestly looking for a long-term relationship and want to make sure that it is the right fit for both of you.
1. What is your experience as an investing professional?
The financial industry does not impose regulations on investing professionals in terms of experience, so you’ll need to pay attention to this answer. You want a seasoned professional—someone who has seen the ups and downs of the market.
2. How will you help me minimize risk in my investment portfolio?
Look for a pro who believes in investing for the long term and choosing
investments with a long history of success. Steer clear of professionals who
don’t encourage you to diversify your investments. Your investing pro can
help you choose a diversified mix of investments that take your retirement
savings goals and risk tolerance into consideration.
3. How will you help me understand why you recommend certain investments for my specific situation?
A one-size approach doesn’t work for investing. Your investing professional should recommend a strategy that works specifically for you and your desired level of risk. Avoid sales-minded pros or “experts” who make you feel dumb for asking questions. The right investing professional will explain every detail to you until you get it—no matter how long it takes.
4. How do you get paid?
Your investing professional is paid any number of ways, so what you’re
looking for is an honest answer. Some are fee-based while others charge
commission. There are pros and cons to each approach. An honest
professional will spell those out for you so you can make the best decision
with your money.
5. What fees are associated with investing?
Fees are part of the investing process, and your pro should explain the difference between front-load commissions and fee-based investing. If your investing professional doesn’t take time to walk you through the fees associated with investments they recommend, that’s a huge red flag. Never invest in anything until you understand how it works, how much it will cost, and how that cost will affect your savings long-term.
It’s important that your investing professional truly wants to help you understand your investments. You should never invest in something that you don’t understand. Look for a pro who takes the time to answer your questions in detail. Remember, you’re looking for a long-term relationship!