Choosing a financial advisor?

[vindikation]

What criteria should a begining investor use in choosing a financial advisor (say $25,000 to invest)?

Thanks

[jdoe]

Ask this:

Hi Mr. X! If your such a great financial advisor why you do have to go to work everyday?


jdoe

[ctv1116]

Why so cynical? A good financial advisor doesn't just do investing, but also estate, tax, and college planning. That said, having interned for two of them last summer, it;s not worth your money unless you are absolutely clueless about investing and really want to have you hand held.

yeah their called financial PLANNERS, most financial advisors are brokers. A majority of the financial advisors do not have a CFP.

[midas]

For that level of investment you don't need an FA. Get some books and stick to mutual funds.

[buffett]

[ QUOTE ]
What criteria should a begining investor use in choosing a financial advisor (say $25,000 to invest)?


[/ QUOTE ]
Fees.

* If you're paying anything more than about 1.5% (in your case, $375) annually--in commissions or wrap fees or whatever--that's too much. And less is better.

* Ask the guy what his five favorite mutual funds are. If at least two of them have loads and/or 12b1 fees, run away screaming.

* Ask the guy if he thinks a variable annuity might be right for you. If he says anything other than, "Heck, no," run away screaming.

-web

[FishHooks]

[ QUOTE ]
yeah their called financial PLANNERS, most financial advisors are brokers. A majority of the financial advisors do not have a CFP.

[/ QUOTE ]

Not many places will hire you without a CFP, also they are soon going to make it a requirement for you to have a CFP in the next 5 years I believe.

really? I worked at morgan stanley for a little bit and only a handful of the advisors there had CFP designation

[Sniper]

Vind,

The first two question you should ask yourself are:

1. Why do you need a financial advisor?
2. What do you hope to get out of the relationship?

[cdxx]

[ QUOTE ]
Vind,

The first two question you should ask yourself are:

1. Why do you need a financial advisor?
2. What do you hope to get out of the relationship?

[/ QUOTE ]

very good questions. here's another one :

3. do you have enough money to profit from a financial advisor? will you be better off choosing just one fund?

[vindikation]

I'm not sure if I am personally ready to invest $25,000 more into the stock market right now. I started with $5000 this week and have taken a beating like almost everyone else this week. I know I can get 3.5% from my Met Life Money Market account, so maybe I should leave the $25,000 in there until I feel more comfortable with stocks & fund choices. Also the Market looks a little strange right now, but maybe this is typical "variance"?

That's my main decision, to hold off and keep the money in a 3.5% Money Market account while I teach myself more about investing (this could take what a month or two?) or pay someone with much greater investing knowledge and have him help me start investing the $25,000 now.

[1C5]

I am in the same boat as you.

I am putting most of my money in varios Vanguard funds and trying to learn how to trade myself.

[vindikation]

I guess maybe I just have piss poor timing buying stocks for the first time this Monday:

The blue-chip Dow average and the broad S&P 500 were down for the fourth day in a row, their longest losing streaks in months, while the Nasdaq notched its third straight decline. The S&P 500 is on track for one of its worst weeks of the year.

http://biz.yahoo.com/rb/051006/markets_stocks.html?.v=16

[buffett]

[ QUOTE ]
maybe I should leave the $25,000 in there until I feel more comfortable with stocks & fund choices

[/ QUOTE ]
Good idea.
[ QUOTE ]
while I teach myself more about investing (this could take what a month or two?)

[/ QUOTE ]
Bad idea. I say take at least a year. Good luck.
-web

PS
Your "sample size" of stock investing is approximately equivalent to playing three hands of 0.50/1 limit holdem. Trying to get a feel for how good you are, or how much variance there is, or ..... anything like that .... based on what you've experienced so far, is not worth attempting.

[Sniper]

[ QUOTE ]
PS
Your "sample size" of stock investing is approximately equivalent to playing three hands of 0.50/1 limit holdem. Trying to get a feel for how good you are, or how much variance there is, or ..... anything like that .... based on what you've experienced so far, is not worth attempting.

[/ QUOTE ]

Buff, you stole my line... I echo this sentiment!

[cdxx]

[ QUOTE ]
That's my main decision, to hold off and keep the money in a 3.5% Money Market account while I teach myself more about investing (this could take what a month or two?) or pay someone with much greater investing knowledge and have him help me start investing the $25,000 now.

[/ QUOTE ]

don't take this the wrong way, and i am not arguing for the sake of arguing, and i am offering this as a heartfelt opinion, not a putdown or pretensious advice.

things you SHOULD do :
- consult someone in person or by reading a book
- learn

things you SHOULDN'T do :
- think you or even a professional financial advisor can and will beat a good fund manager

if you are willing to take some risk on a portion of your money and via professional advice aggressively try to beat the market, $25k is not a lot and the advisor and transaction fees will hurt your gains (rake).

[JTrout]

Put half in WMT, and half in HD.
And hold.

[cdxx]

*sigh* compared to you, JT, i just don't have the balls to put my 25k into 2 stocks. /images/graemlins/smile.gif i split that much between 2-3 funds. my best bets were small-cap growth, financial sector, and russia, up 30-50% in 1.5-2 yrs that i held them.

.....and earn nothing...

[squiffy]

Most financial advisors probably won't be interested in working with someone with a portfolio under 500K.

You can learn most of what you need to know on your own. In the meantime, put your money in a 6 month CD at 4% or a money market at 3.5% if you need access to it. Or put it in the Vanguard S&P Index 500.

Though this might not be the best time to get into the market.

I would park it in a CD so you can beat inflation. And study.

[squiffy]

It would be very difficult to find a good advisor period. It would be hard to find a good one who would bother to work with such a small portfolio, not really worth his time.

And even if you can find one, unless you know something about investing, you cannot figure out if his advice is sound or not.

You should always study on your own and manage your own money unless you are a minor, a mentally challenged adult, or so elderly that you are not confident you can properly manage your funds.

For any reasonably competent adult with a high school education, you should manage your own money. Period. You cannot trust anyone else to do it.

[Sniper]

[ QUOTE ]
things you SHOULDN'T do :
- think you or even a professional financial advisor can and will beat a good fund manager

[/ QUOTE ]

cd, this is just bad advice that isn't true!

[Sniper]

[ QUOTE ]
Most financial advisors probably won't be interested in working with someone with a portfolio under 500K.

[/ QUOTE ]

This is not the case, there are many financial advisors that provide advice to those with few assets.

[ QUOTE ]
You can learn most of what you need to know on your own.

[/ QUOTE ]

I do however, agree with this... especially, considering the capabilities of the audience here on 2+2.

[Sniper]

[ QUOTE ]
You should always study on your own and manage your own money unless you are a minor, a mentally challenged adult, or so elderly that you are not confident you can properly manage your funds.

For any reasonably competent adult with a high school education, you should manage your own money. Period. You cannot trust anyone else to do it.

[/ QUOTE ]

As I've stated in many other posts, its important that people learn how to invest their own money.

However, there are many other groups of people than the ones you mentioned that can benefit from some sort of financial advisor.... the finacially clueless, people with no time (you'd be surprised how many people think they fall into this category), people with complex financial situations, people looking to further enhance their knowledge, etc.

[JTrout]

[ QUOTE ]
.....and earn nothing...

[/ QUOTE ]

since you made this comment,...
Dow up 1.1%
WMT up 7%
HD up 8%


....and it's gonna get better! /images/graemlins/laugh.gif

With 25k youre not going to get much. Any of the major banks have an asset planning formula they can stick your money in to recommend a basket of mutual funds. The risk is that they stick you in proprietary funds or funds where they otherwise get sales fees. So you may want to go with an hourly advisor who develops a diversified portfolio recommendation for you. Visit him once a year and get a rebalancing.

FWIW, asset managers are hard to find. My wife and I have been looking for a decent one for more than 3 years now, without success. We gave around 100k to some guy when we first got to NYC, and he has managed to tread water with it. I've gotten basically the return I could have gotten through ING Direct, and Ive incurred capital gains in the process.

Investing sucks.