Last Updated Jun 10, 2009 1:48 PM EDT
The recent financial crisis may have many of you wondering about your relationship with your investment advisor. In October (during the height of the crisis), research from Russ Alan Prince of Prince & Associates found that 81 percent of investors with more than $1 million planned to pull assets away from their advisor or change advisors completely.
Those of you looking for advice on finding an advisor may have trouble getting it from your friends. In the same survey, 86 percent of those surveyed said they were actively telling their friends to avoid their advisor.
On the other hand, here's some advice that should help you if you're looking for an advisor or to change advisors. (And you don't have to be worth $1 million to use it.) Make sure you ask the following questions to anyone you are considering as your advisor:
- How are you paid? Advisors who are paid on commission have an incentive to promote specific products, even if they might not be the best products for you.
- Will you guarantee in writing to always act in my best interest? It's one thing to have an advisor tell you he or she is always looking out for you. It's another thing when your advisor puts it down on paper.
- How do you decide what assets I should hold? It's important to know how your advisor chooses his or her investment recommendations, which includes the academic research that went in to deciding the investments' appropriateness.