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Finding the Right Advisor

August 3, 2021

Looking for help managing your money and investments? It might be time to start working with a Registered Investment Advisor. Listen to your gut and keep these tips in mind to find the right fit for now and in the future.

Broker vs. Advisor

Do you know the difference? A lot of people don’t. The most basic explanation is that Registered Investment Advisors are paid a flat fee or percentage of AUM (Assets Under Management) to advise clients on investment strategies and/or manage portfolios. Brokers are paid commissions to execute trades or buy and sell assets (securities) for clients. Both are legally prohibited from giving advice that conflicts with their clients’ needs, but what does that really cover?

In the financial world, there is a standard of care that must be followed when investing on someone’s behalf. For broker-dealers, stockbrokers, and insurance agents this means ensuring the investment is suitable to the client. Current income, holdings, debt, experience, and risk tolerance are all key factors in determining whether a particular security or investment would be recommended. Simply put, a broker is an intermediary between a buyer and a seller and will arrange transactions suitable for clients.

For Registered Investment Advisors*, or RIAs, there is an added level of responsibility known as the fiduciary standard of care. Not only must they ensure the investment, product, or advice given meets suitability, but they legally must act in the best interest of the investor. It typically comes down to managing relationships from a holistic perspective across multiple financial topics and products. The RIA is the investment professional and clients have direct access to the decision maker. Investments and allocation decisions are made in a coordinated effort between advisor and client. The bottom line is the relationship is the priority and you should be working with someone who truly puts your needs above their own.

OK, I am ready to talk to someone. Now what?

The best place to start is taking an honest look at where you are financially and what you need and want not only now, but in the future. Professionally, many RIAs will let you know where they excel or specialize. Are you just starting out and looking to aggressively accumulate your assets as quickly as you can with more tolerance for risk? An RIA who specializes in Portfolio Management and investment research is probably your best bet. Are you a few years away from retirement but you’re worried about expenses vs income and how you can maintain your lifestyle when retirement happens? Overall financial planning with a firm that offers education and an emphasis on protecting and growing your nest egg would probably suit you well. Are you ready to wrap up your career or already retired but you are concerned about outliving the money you’ve saved and how changing legislation could affect your savings and investments? Retirement and Wealth Management advice is what you’re looking for. Wherever you are on your path, make sure the details are addressed and don’t forget tax concerns, estate planning, healthcare, Social Security – not all RIAs are a one-stop shop; the bottom line is: do your research. Do they offer a free assessment? Take advantage of it. Meet with them to see if you are a good fit for each other. Then take the plunge and forge the relationship – it could be one of the most important ones you make in your lifetime.

*All Registered Investment Advisors registered at the state or federal level must act as fiduciaries.