What you should know about your investment professional

Most investors end up hiring someone to help guide them, in the investment decisions. Successful investors will tell you that, who you hire to help you, is just as important as the investing decisions that you make. You will need to know just as much about them as you do, the investments you put your money into. One of the major factors that will ultimately contribute to the success of your investments, is knowing what your investment professional can and cannot do. Too often novice investors learn the hard way that results in them wishing they had taken the time to do the needed research about the person who they trusted with their investment money. Here is what you should know about your investment professional-

• Know how the investment professional get paid-Before you sign any sort of agreement or contract with a investment professional, you have a have a clear understanding of exactly how they get paid. This is crucial to know whether you are looking to hire a financial planner, stock broker or an investment professional. The reason that you want to know this is that how a financial professional gets paid will determine in large part, what type of investments they recommend to you. There are several different methods that can be used, for payment to an investment professional. These methods are-
  1. They bill you an hourly fee, for the work they do for you.
  2. They receive a percentage of the value of your investment assets.
  3. They have a fixed fee.
  4. They are paid by commission, depending on the type of investments they recommend.
  5. They are paid in a combination of the above listed methods of payment.
  Investors should understand that there are benefits and pitfalls to each of these payment methods. You will need to determine if the method of payment that any investment professional receives fits into your financial goals and plan. You want to make sure that you have any potential investment professional, (that you are considering working with), explain the differences in the methods of payment. You also should ask if there is room to negotiate on the method and amount of payment, based on the success of your investments.
• Know what the different registrations mean-A reputable investment advisor will have registered either with the SEC or the securities agency, in the state they dobusiness in. Most investment professionals will register with the SEC if they manage over $25 million dollars in assets. For investment professionals who manage less, registering with the state securities agency should be sufficient.
• Know about the record of any investment professional you are looking to hire-You want to make sure that you are entrusting your money to an investment professional that has a clean record. You should take the time and make the effort to determine if the investment professional has had any disciplinary action. There are several government agencies that must make this information free to the public. You should not hesitate to contact your state securities agency to request a Form ADV concerning any investment professional you are considering working with. The first part of the form will have information about the investment professional's business. The second part of the form will deal with the services, fees and other people that the investment professional works with. You should make sure to read both parts.You should also check with any registration agencies online to determine if the investment professional has had any problems in the past. The bottom line is that you are only protecting yourself by taking the time to check out any investment professional that will be handling your money.