Understanding Investing
4/30/2017 at 1:14 AM
Great questions! I work in the industry here in Brandon. Here are a few helpful pointers to think about when looking for someone to talk to about investing. Firstly and mostly talk to a professional! Don't listen to what you read from message boards or friends. It's ok to use them to help guide you but make sure you talk to a professional before doing anything. For example its not like you'd ask a carpenter or plumber for wisdom regarding your health, no you'd probably go see a doctor. Same type of case regarding your fincials and getting advice. When you start seeking a professional to talk to you will want to make sure that the person has proper credentials. They should either be an established senior financial adviser/financial consultant who has their CFP designation already or a newer adviser/consultant who is currently taking the course to become one. Be aware of the advisor vs adviser difference. If you don't know the difference be sure to read up in it. Second, understand what you are looking for in regards to service and what you want. Some consultants worry only about investments and ignore the other five pillars of financial planning which are extremely important. Having a holistic financial plan that incorporates all six pillars of financial planning will on average give you over 4x's more investable assets over you life then just concentrating on invesment planning. Some institutions, like banks, only look at investments, I am not saying this is bad or good as it depends on what you are looking for. Other institutions like independent firms concentrate more on the holistic planning side of things. I suggest before you meet with anyone you familiarize yourself with the differences of investment planning and holistic financial planning. Next, generally people always mention returns and fees. Don't get me wrong these things are very important but are often focussed on too much. For starters people tend to want to get the highest returns possible and base their decision on where they go solely on this which is the wrong thing. High returns are great and something to strive for but many factors dictate what return you get. Things like the time horizon of the investment, how comfortable you are with risk, frequency of contributions, etc. On a side not, most mutual funds these days have almost the same components of stocks inside each other when you compare them from company to company, given that you are looking at proper peer funds. For fees this is referring to MERs for mutual funds but brokers also have fees too (usually a base % for management and trading costs and others on top). If you hear the term advisery fee this is a component of the MER and not the whole thing. Low fees are ideal for sure but again be careful on just picking the institution with the lowest fee. Look at what you are getting in regards to service and planning for the fee which you are being charged. All companies need to make money as it is a business after all so generally the lower the fee the less you get for service and financial planning to a certain point. The last thing I would say when looking for someone to talk to is make sure you like them. This is the biggest thing I would say. You have to like the person you deal with and trust them, afterall you are entrusting them with your financial life! They should be someone you can relate too and feel completely comfortable with. Whomever you end up working with should be able to ask you anything about your finances and you be 100% comfortable talking to them about it and disclosing information as that's their job, to make your financial life better. My biggest goal that I have with my clients is that I want them to be in control of their finances not the other way around. I work with them to make sure they are able to achieve their goals throughout life and make their money work harder for them. Hope this helps and good luck!!!