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Saturday, June 20, 2015

Invest wisely with those who are wise to investments



A stock broker who services individuals is also known as a financial advisor. The job of a personal financial advisor is to provide you with investment advise in the context of your overall financial plan. Stock brokers who are also personal financial advisors will not just ask you how much money you have to invest and set about to invest it in the most promising products; they will first do a careful analysis of your cash flow, you revenues, your expected advancement, and take into consideration your financial objectives. Through forms and interviews with you, he will gather the data he needs to analyze your financial condition and its prospects. He will use gathered information to locate opportunities suited to your financial situation, come up with a plan to introduce you to these opportunities, and will then manage them for optimal performance.

Some financial advisors will also plan and manage other areas of your financial life besides investments, although most financial advisors stick to investments. They may provide additional services to provide consultation for tax planning, insurance, the buying of businesses, planning for children's education, and estate planning. All parts of your financial life impact the bottom line; having a financial advisor who also attends to areas besides investments will probably result in a better integrated plan for you and your family.

The majority of those who call themselves financial advisors are essentially stock brokers. They are best found among the big corporations that, in the United States, have registered with the Security and Stock Exchange Commission (SEC) as an investment advising firm. They may also be registered by a state. If you are hiring a financial advisor primarily for investment management, you will want this advisor to be a member of a registered firm. Don't fault stock brokers who are not with a large firm that is registered with the SEC; a firm that's registered with the SEC must have over $25 million in assets that are under management. Just because they are managing a lot of assets doesn't mean they're doing a good job of it. There are smaller firms that out-perform them. Startup companies may have some very talented stock brokers, yet these will at least be registered as a financial advisory business in the state in which they do their business. Whether you go with a big firm stockbroker or a small firm ones, be sure they're registered.

You don't have to be rich to enlist the services of a financial advisor, but you should be aware that some will cost more than others. Stock brokers are paid either a flat fee or a percent of earnings (usually not more than 1.5%). If you go with one who earns commissions and that broker does a marvelous job, you could be paying him more than if you went with a fee only stock broker. On the other hand, if you pay a fee and your stocks do poorly, you'll still have to pay the fee. Some people prefer commissioned brokers since they have something at risk.

Whether fee or commission paid, stock brokers will have the inside on the products out there and the means to obtain them quickly for you. If you're considering your financial future now and think investments will generate the income you need, by all means, find a financial advisor with an expertise in investments. When those returns start to build up, as your reinvestments begin to pay, as that cash account gets fatter and fatter, you'll be glad you did.