by aC

Created on: January 10, 2009

Is your stomach churning with the gyrations of the stock market? Does your heart palpitate each time you read about more depressing financial news in the newspapers? Is your portfolio worth only 50% of what it used to be a year ago? Do you no longer have any idea where to park your surplus cash given the price plunges in equities and commodities? If your answer is a resounding "yes" to any of the above questions, then it is time to engage a reliable and competent investment advisor.

But how does one find a good advisor that he/she can rely on? I believe the following pointers will help:-

(1) Reliability

Ask yourself these questions - Can this advisor be trusted? Beyond the suit and tie, does he/she have proper documentation? Which investment company does he represent? Is it a company regulated by the authorities or does it fall under the blacklist of the authorities? Depending on the jurisdiction you are living in, such blacklists should be readily available on the relevant governmental websites. Furthermore, it literally pays to pay a visit to your advisor's office to have a look. For example, if the concept of the interior design is minimalist and the furniture is in a makeshift condition, it may indicate that the company is prepared to run in the event the company is facing financial difficulties.

(2) Competency

Does the advisor know his stuff? Is he/she an expert in the investment arena or is he/she merely a salesman making a sales pitch? In this case, it is beneficial to conduct your own research before meeting up with the advisor. If you do not understand some of the items that you have read, ask your advisor about them - That's what he/she is paid to do. If he/she cannot address your queries in a satisfactory manner, then you know something is amiss. Test him/her on current events as well.

(3) Commission

Do not be embarrassed to ask your advisor about the commission he/she earns on the different financial products that he/she is selling you. In this way, you will be in a better position to determine whether the advisor is selling you a product because it suits your investment profile or is he/she trying to "push" you a product in a blatant attempt to earn higher commissions. Ask your advisor to justify as to why a particular product "suits" your investment profile.

(4) Updates

Does the advisor provide you with prompt updates when there are material changes in your portfolio? Does he/she provide you with adequate advice on what you should do in the event of such changes? It is the advisor's responsibility to provide you with such updates because that is the primary reason that you have engaged him/her as you do not have the luxury of time to monitor your own investments.

By taking note of the 4 pointers above, it will greatly minimise your chances of meeting an investment crook instead of a genuine advisor! Happy searching for your advisor and caveat emptor!

Learn more about this author, aC.
Click here to send this author comments or questions.