Choosing a Financial and/or Investment Advisor is a very important decision for any company, person or family. A good consultant can help you identify your goals, know your risk profile, establish an investment plan or strategy according to your financial goals and generate growth or patrimonial protection. It can also guide on risk management issues, revenue optimization, credit decisions and investment projects.
However, many people choose not to advise, or consult economic and financial topics with friends who are often not suitable, and do not have the “expertise” necessary to advise professionally.
Common mistakes when choosing a financial or patrimonial consultant
1. Contracting an Independenceless Advisor: A consultant working only under the guidelines of a financial institution may seek to advise only within the spectrum of products or services of your Bank or Broker, regardless of whether this institution has the most suitable solutions for you. If your advisor constantly offers only products, it is likely time to find another one that has greater focus on the customer.2. Choose the first adviser you know: Take the time to interview with multiple advisors, before choosing the best option for you.
3. Have an Advisor in the wrong specialty: Within the financial field there are several specialties, some advisers specialize in financial and retirement planning, in areas of insurance and patrimonial protection, others are financial consultants for business owners or companies (Corporate Finances), others are in divisions of “portfolio management”, “trading” and purse; while another group specialize in banking and credit products. Make sure you know the strongholds of your advisor and are aligned with your requirements.
4. Do not validate credentials and references from other clients. See your licenses and certifications: There are advisors who have licenses for brokerage as Series 6 or 7, Series 63, 65 and 66 (FINRA). Others become CFP Financial Planners, CFA (Chartered Financial Analyst and Certified Financial Planner) Etc. These accreditations according to the case and the prior registration of regulators in the capital markets, validate the areas of activity and specialization of the advisor or corridor.
Five. A good financial mark does not necessarily imply appropriate advice: Important financials such as JP Morgan, Goldman Sachs, Barclays, Merrill, Morgan Stanley, etc. guarantee the customer safety in their deposits and funds, in addition to a wide range of investment solutions and financial products, but do not necessarily guarantee that they will be properly served, these signatures tend to focus on investors of large assets and can put in the background the average or smaller capital investor.
6. Do not clearly define the fees and how they are generated: Consultants receive their commissions from the transactions directly from the investment funds or entities to which they work, others who charge their customers for the performance of their investments and capital management (performance fees), and others charge for custody and administration (asset management fees), including some may charge for visits or hours of consulting. It is important to clarify this when starting the relationship.
Finally, as it is essential to have a good mechanic for your car or a good doctor for your health, it is very important to choose a financial advisor that contributes with your advice and guidance to strengthen your personal or business finances and collaborate to improve the performance of your investment portfolio.
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