Finding the Best Investment (Advisor)

A common question that I get is “What’s the best investment?” The answer is: There is no best investment. Each investment has pros and cons. The key is finding an investment that matches what your needs are. Note: If you don’t know what your needs are, do our 5 Needs of Money exercise.

Instead of looking for the best investment, you should look for the best Investment Advisor for your needs. Here are the features I recommend looking for when looking for a financial professional:

1. Independent – An independent advisor is someone who isn’t contractually obligated or employed by one specific company. Unfortunately, most advisors who work in schools, police departments, fire departments, and other public employers are captive, meaning that they can only recommend the products that they’re there to sell.

   An advisor who can only use one product or company is like a contractor who can only use a hammer. Sometimes a hammer is a useful tool, but more times than not it won’t get the job done correctly.

2. Fiduciary – A fiduciary advisor is someone who legally has to put your interest before theirs. Many of you have probably heard this word, and there are actually DOL law changes that are coming that will make it so that most advisors have to act in their client’s best interest, but unfortunately most Non-ERISA 403(b), deferred comp, etc. plans will be exempt, which means those sales people do not have to act in your best interest.

   Also remember, just because someone is a fiduciary, does not mean their advice is good. You probably can think of a family member that has your best interest at heart, but you wouldn’t take financial advice from them. Conversely, just because someone isn’t technically a fiduciary doesn’t mean they’re going to take advantage of you. Some of the best and most honest financial professionals I’ve ever met were not fiduciaries. They acted as fiduciaries, but they just didn’t have the time or desire to get their Series 65 or 66 licenses to make it official.

3. Someone who’s used to working with people like you – I have two types of clients I specialize in working with 1) Retiring Florida Public Employees and 2) Retiring clients who want limited to moderate risk in their investments. We have advisors in our office that specialize in just insurance, employer plans, more aggressive investments, etc. I know advisors who specialize in working with farmers or doctors or military. It’s good to find someone who has seen your situation before and has experience with it.

   In my opinion, the financial industry tries to cast too wide of a net with who they work with. There’s a reason that doctors and lawyers have specialties. To become truly great at something you have to focus on mastering something specific. Financial Advising is no different. I get calls all the time from other financial advisors asking how to fill out DROP forms or what the rules for deferred comp are.

4. Do your research – You should always check out your advisor’s credentials, work history, disclosures, and other business practices on the FINRA Broker Check. This site gives you a rundown of every securities licensed investment advisor and securities brokers.