Choosing a Financial Advisor

sandland · #1 (**permalink**) 09-21-2007, 01:28 PM

Hi there,

I would like to take professional financial advice for my personal finances, but don't feel that my bank would be neutral - they've got plenty of financial products to sell, and I'm sure they sell on commission!

I'm looking for advice paid by the hour, with no ties to financial products of any sort. However, I'm located in the Middle East, and don't feel that there are many high quality advisors around here.

I'm from the UK originally, but I'm not a registered tax payer there, and don't ever intend to live there so all the local knowledge that a UK advisor has would likely be wasted on me. What do you recommend?

Do you think it's critical that I sit face to face with an advisor, or is it something that can be done over the phone / web?

How do you guys tell a good advisor from a bad one?

Do you go with a big company, or is a one-man shop better?

I'm also interested in hearing about general experiences with financial advisors - what to look out for etc.

Or is buying a personal finance book just as good?

Cheers,

sandland

jiddim · #2 (**permalink**) 09-21-2007, 03:18 PM

My best advice is to get a referral from a friend in the area. There are a lot of things to consider when choosing a big co vs. a small agency, etc, you also have to think about what you can afford. But a lot of financial advisers in the states are basically just sharks, so it's crucial to get good feedback on one. There was a funny simpsons episode about that...the family goes to see a financial adviser and she tells them "You need more money." Homer asks, "Well, how do I get it?" She replies, "I'm a financial ADVISER, not a financial CONSULTANT."

Hermes · #3 (**permalink**) 09-22-2007, 05:42 PM

It really depends on what you need the financial 'advisor' for.

Most so called financial advisors are not worth the fees they charge you and most of their advice is common sense.

The majority of people think they need an advisor but most of them are able to take care of the things they thought the advisor would be good for after doing some research on-line or reading a book or two on that matter.

Here is one suggestion:

1.Sit down and write a list of all the things you think you need your advisor for.

2. See how many of those things you can handle by yourself.

3. Do some research on-line and see what you can find out. Read a book or two if neccessary and check the things on your list which you are able to handle.

4. How many things are left on your list? Is it worth it to hire a financial 'advisor'?

More then 80% of people eliminate the need to hire an advisor.

The Mutual Fund Investor · #4 (**permalink**) 09-23-2007, 10:03 PM

Quote:

Originally Posted by sandland

Hi there,

I would like to take professional financial advice for my personal finances, but don't feel that my bank would be neutral - they've got plenty of financial products to sell, and I'm sure they sell on commission!

I'm looking for advice paid by the hour, with no ties to financial products of any sort. However, I'm located in the Middle East, and don't feel that there are many high quality advisors around here.

I'm from the UK originally, but I'm not a registered tax payer there, and don't ever intend to live there so all the local knowledge that a UK advisor has would likely be wasted on me. What do you recommend?

Do you think it's critical that I sit face to face with an advisor, or is it something that can be done over the phone / web?

How do you guys tell a good advisor from a bad one?

Do you go with a big company, or is a one-man shop better?

I'm also interested in hearing about general experiences with financial advisors - what to look out for etc.

Or is buying a personal finance book just as good?

Cheers,

sandland

I would suggest that you meet in person with an investment advisor

Financial advisors and investment advisors have varying levels of expertise. Some advisors are worth the fees and some are not. I would ask an advisor several questions prior to letting him or her manage your assets. I would ask questions about investment experience, educational background and other credentials. Some advisors in the US have very limited investment experience and perhaps have only passed the series 7 or 65/66 exams while other advisors could have credentials similar to that of a portfolio manager at a mutual fund company. I would not pay a high fee for someone with limited credentials.

I would also ask at least the following questions:

What is your investment philosophy and approach to risk management?

Is he available to meet with you to answer your questions or meet with you when necessary?

Will he prepare an investment policy statement (IPS) for you? The IPS helps to ensure that there is a clear understanding between the client and the investment advisor

If he has a documentable performance track record, can he provide it to you?

You should ask an advisor about whether he or she has any type of criminal record.

You should also do some reading on your own. I highly recommend The Intelligent Investor by Benjamin. He is considered by many to be the father of value investing. Graham was a professor at Columbia University and one of his students was Warren Buffett

Michael A. Weiss, CFA
The Editor
The Mutual Fund Investor

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