Although I am a fan of do-it-yourself investing, I’m sure many people would be more comfortable hiring an adviser of some kind to invest their money. The assumption would be that someone with expertise would have better information and would be able to make better decisions than the individual could. Some might look for people with titles such as:
- financial analyst
- financial consultant
- financial planner
- investment consultant
If you would automatically put your trust in anyone with one of these titles, DON’T.
According to the U.S. Securities and Exchange Commission:
“Anyone can use these terms without registering with securities regulators or meeting any educational and experience requirements”
That means anyone can literally print out a business card with their name on it and any one of those titles and be in business. Scary, isn’t it? Before reading that, I would have probably taken advice from one of those “professionals” with more weight than it would deserve.
So who can you trust?
I accept that some people are more comfortable with an adviser handling their investments. If that is you, try looking into hiring someone with the title:
- Chartered Financial Adviser (CFA)
- Certified Financial Planner (CFP)
Both of these titles require significant training and completion of intense comprehensive exams. In particular, the CFP must master over 100 financial planning topics, and the CFA must have 750 hours of study and pass three exams.
In general it is a good idea to ask a potential adviser what they’re qualifications are, what they studied in school, and what related work experience they have had. If they’re answers don’t make you comfortable enough to let them handle your money, look for another; there are plenty of well qualified advisers out there.
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