Getting The Best Out Of Your Financial Planner
If you are to use a financial planner, it is best you do a thorough research on them. More importantly the recommendation to hire them is via word of mouth of satisfied customers.
It is vital that you both have a common objective on the investment philosophy and approach. For example what is the risk level you are willing to take and your asset allocation preference? Are you willing to endure a high level of price volatility? What is your investment horizon time frame? Are you close to retirement age?
If they sell you mostly their in house products, find out the details regarding fee structure and liquidity. Many in house products cannot be transferred or sold back into the market easily. For example some private equity or hedge funds can take a long time to redeem out after purchase. I have previously bought private equity funds that promised they will be fully invested and exited after 8 years. I am still holding them after 15 years. I cannot exit until the fund manager decides it is the right time for them to do so. Many of the exceptional terms are all in the small print.
"Wall Street is the only place whereby people going there in their Rolls Royce trying to get advices from people who travels to work via the tube." Warren Buffet.
I am not being cynical. Experience tells me many of the financial products are packaged that are not easily understood by the general public. This is what happened during the financial crisis in 2008 when people all rushed in to invest in the subprime market. People were grossly misguided that their fund asset was of high credit quality and low risk.
If there are jargons or terms within the fund that you do not know, make sure you understand the implications before making a decision. Recently my mother was sold a structured product by a well-known bank. Because of her age, I took an interest regarding the details of the product. It was a highly complicated derivative product which took me significant time to digest. My mother was aged over 92! To me it is immoral to sell someone a product they have no chance of understanding.
Know Who To Ask
Throughout my investment journey, I undertook many training courses. I was inundated with the “so called” investment experts with secret formulae to success.
Every day I received emails on special offers for privileged investment ideas. Financial planners and bank advisors will sell you products and services that are supposed to offer great returns. Their performance is mostly historical and there is no guarantee the future performance will repeat itself.
I was often offered special tips or inside knowledge to make a good profit via different channels. Often these advices are not useful. If they are so special, why will they not keep it for themselves? By blindly putting money into these investments, you can lose a lot. My best performing investments are those I spend time researching and something that I know thoroughly.
Not all people are working for your personal interest. They are selling you things for their own gain. It is best you try them out gradually and only put your complete trust in them after they have proven themselves.