Feeling overwhelmed by all the options to invest your money? Shopping for Investment Advice
December 14, 2023
Holiday shopping can feel overwhelming: Black Friday sales, Cyber Monday sales, in-store discounts, in-app discounts, this store, that store, this website, that website. Investors, too, may feel overwhelmed by the number of options they have to choose from when looking at how and where to invest their money. Not only are the number of investment products (such as stocks, bonds, mutual funds, or exchange-traded funds) vast, but so, too, are the variety of channels to access these products (broker, financial advisor, robo advisor, online brokerage account, bank trust department, to name a few). Whether you are new to investing or considering a change in how you invest, here are a few factors to consider when shopping for investment advice.
DIY?
Are you a do-it-yourself investor or considering going it alone? There are two primary factors DIY investors must consider – cost and technology. There are numerous platforms available for the DIY investor and a simple internet search for trading platform ratings will provide dozens of results. Cost is one of the most important factors for every investor, so be sure to closely review the fee schedule for the platform provider, including the fine print. In addition to their published fee schedule, seek information on the firm’s order routing practices and order execution quality, as these topics have been covered in the financial news media in recent years.
Technology considerations for the DIY investor range from ease of access to tools to data security. Most platform providers provide app-based access, but also consider what tools are available through the app versus the portal you would access on your pc, laptop, or tablet, if trading from anywhere is important to you. Occasionally, technology may also be tied to the fee schedule, such as real-time securities pricing, research or advisor access, and charting options may require additional charges. Lastly, review any published documentation or articles on the platform provider’s data security, any data breaches and their response, and multi-factor authentication practices.
Need Professional Guidance?
Most investors could benefit from the guidance of a financial professional, and like the DIY investors, cost and technology are important factors. However, there are other factors such as capabilities, service delivery, and service extensions that may be equally important that you would want to consider carefully. If you know professional guidance is the route best suited for you, the next step is finding an advisor.
An easy way to start is by asking friends, family, or colleagues if they use a financial professional. For those that do, be sure to ask why they are working with that person. The answers you receive may provide valuable information for your search, or prompt questions you may want to ask of potential candidates. You can also conduct internet searches using FINRA’s BrokerCheck tool, the National Association of Personal Financial Advisors (NAPFA) web search tool, the CFP Board’s web search tool, or by searching for “financial advisors near me” or similar terms in your internet search engine.
Assessing the capabilities of the financial professional and the firm he or she represents is critical. Is this a seasoned professional or someone relatively new to the role? Have members of the firm earned professional designations and are they committed to continuing education? Is the firm a recent startup or a well-established business? Aside from the ability to provide services, you should be comfortable with how services will be provided. Will you receive an annual phone call or video conference to review your account(s) or will you be afforded an in-person meeting?
As noted above, cost is an important factor to consider, and the fee structures from financial professionals largely fall into two categories: (1) commissions resulting from the execution of a transaction, or (2) level fees that are recurring, typically based on the value of the account, and reflect an ongoing service relationship. If the financial professional recommends a product, such as an annuity or mutual fund, you could expect a commission-based fee schedule; whereas if they present a solution such as a managed portfolio, a level fee scheduled would likely be appropriate. There may be other account fees to consider, such as paper statements, funds transfers, pass-through trading expenses, and account closing fees; all fees should be disclosed in a published fee schedule. Technology considerations matter here, too, and for many of the same reasons as the DIY investor. Data security is a critical component anytime you are providing non-public, personal information to a service provider.
If you are in the market for professional investment advice, seek expert guidance from a local financial institution, such as ACNB Bank, and inquire about the wide variety of product and service offerings provided by a dedicated and experienced team.
Ready to talk about your financial goals? MEET THE ACNB BANK TEAM
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