Most people who invest in the stock market do so by putting themselves in the hands of a financial advisor. This expert guides them and tells them which are the best investment products according to the risk they wish to assume and the profitability they want to obtain. The problem is that it is difficult to find a good financial advisor , since a large part of them are “married” to a specific financial entity. To find out if you can trust or not your advisor, we suggest you do the following five questions.
Can I trust my financial advisor?
- What is the total of expenses that I am going to assume?
It is the most important question of all. The investment is not free and involves a series of expenses that must be known in advance. In addition to being very clear about the price of the advisory service – and if this is by consultation, by hour or by delivering results – you also have to know the total expenses of the products in which it is invested, as well as the costs of the internal transactions of the funds, of the currency exchange or of the forks that are applied in the sale purchase.
Keep in mind that in the financial advice the total free does not exist, so if a financial adviser offers you 0% of expenses you are lying. Only large fortunes will get commissions below 0.5%. For the normal investor, a margin of between 1.5% and 2.5% in expenses is normal. Less expenses would be very good and more expenses is not justifiable.
- How will you diversify my investment?
If the financial adviser proposes to invest all the money in a single company, in a single country or in a single sector, he may be speculating. You should run away. A good advisor will propose to create a globally diversified portfolio that includes many companies from different sectors and different countries, as well as fixed income, both corporate and public.
- Could you show me an example of a plan you made?
It is important to know the work and specialization of the financial advisor in which we are going to deposit our trust and what better way to do it than studying some of their current jobs. A good advisor should show us, in addition to extensive information in the form of text, also tables and charts with the returns of different funds and products depending on the risk that we assume to assume.
- What will be the fiscal impact of my investment?
It is as important to know the profitability of the investment as the taxation linked to it. The adviser should update us on this aspect and explain to us with hairs and signs the invoice that we will have to pay to the Treasury for the benefits we obtain by investing our money. You can not imagine the surprises that many people who invest in pension plans take when the time comes to recover the money …
- What information will I have access to?
Before the investment was a bit taboo and difficult to understand. Thanks to the internet, the opposite is true today. It is no longer necessary to visit our advisor every so often to update us on our investment, but rather to have the right online tools to check at home how our money grows.
However, that does not mean that the consultant should be there to resolve any doubts that may arise. Therefore, it is important to be clear about how often we will receive updates about our investment. There are advisors that send monthly information, other quarterly and some annual. Many advisers also send general investment information to their clients so that they learn, for example, about the functioning of the financial markets.