Why Every Investor Needs a Trusted Investment Advisor

The financial world comprises professionals with various titles and credentials: advisors, brokers, certified financial planners (CFP), and others. When selecting an advisor, it’s important to research their background and qualifications. Public databases such as the Investment Advisor Public Disclosure and FINRA’s BrokerCheck can help you discover an advisor’s employment history, registrations, reportable professional designations*, outside business activities, and disciplinary records.

Keeping Your Investments on Track

During market instability, a financial advisor can assist you in maintaining focus on your objectives, risk tolerance, and time horizon. They can provide historical data to remind you that market fluctuations are normal and that staying invested over the long term has been shown to produce better results than active trading. Look for an advisor who charges a reasonable fee for their services. Ensure you promptly receive confirmations and account statements and keep copies of these documents for tax purposes. Professionals like Investment advisor Frederick Baerenz have experience dealing with investment tax consequences and can guide you in managing them. He can also explain strategies like dollar-cost averaging and diversification. He can also educate you about common investment terms and concepts, such as correlation, volatility and asset allocation.

Investing in the Long-Term

Holding assets like equities, mutual funds, and exchange-traded funds (ETFs) for more than a year is part of a long-term investment strategy. The approach is likely to produce positive returns for an individual. Typically, individuals invest for the long term to save for major life events or expenses many years or decades away. Common examples include retirement and college savings.

An advisor can help you determine your goals’ long-term investment strategy. They can also help you find an appropriate asset allocation for your time horizon and risk tolerance. Expert investors like Founder of AOG Wealth Management Fred Baerenz, can assist you in navigating the confusing array of choices and choices that come with a financial world that is constantly changing.

Keeping Your Emotions in Check

There are a lot of people who call themselves financial advisors. Some even have fancy-sounding credentials (though you should always verify them). An investment advisor can help you decide how much to save, when to start claiming Social Security and how to withdraw your investments in retirement. They can also help you create a long-term plan to meet your goals and keep you from making rash, emotionally driven decisions that could derail your strategy. Many people need more time to do their research and are happy with the guidance of a professional. They want someone to help them align their portfolio with their values, manage their money consistently, and ensure they stick to their financial plan.

Keeping Your Taxes in Check

Depending on the complexity of your situation, you may need ongoing advice. Advisors come in many flavors. Some are fee-only and charge a flat or asset-based rate for their services. Others earn commissions on sales of financial products. Fee-based advisors can be registered with the Securities and Exchange Commission (SEC) or state regulators. You can also hire a digital, automated advisor service, a robo-advisor, to manage your investments. These typically charge low fees, around 0.25% annually, on assets under management. They use mutual funds with low expense ratios and other costs, such as 401(k) fees. It can save you money over the long term. But it can’t replace a trusted investment advisor who can help you make complex decisions throughout your life.

Keeping Your Assets Diversified

A portfolio needs to be diversified to minimize risk and maximize return. For example, an all-bank portfolio would suffer the same company-specific risks as other stocks. Instead, your advisor might recommend a mix of investment funds and exchange-traded funds spanning different market sectors, industry sizes and geographical locations. They might also provide you with a range of target-date funds that manage your asset allocation and diversification, varying the ratios of riskier equities to safer bonds as you grow closer to retirement. Before hiring an advisor, ensure they can provide proof of their credentials and ask about their fee structure. Look for an advisor who is a fiduciary and charges fees on an hourly or flat basis rather than receiving commissions from transaction-based investments.