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Once investors are clear on what they want, what questions should they ask a potential advisor?

# 2: How do you get paid? This is the most important question an investor can ask a potential advisor. When the compensation method is a fee, based on assets under management, the advisor can only get a raise if he or she grows the investor's account.

# 3: How will you invest my money? It is critical that the advisor has a clear plan for investing the client's money.

* How will the advisor determine which investments are right for the client?

* Is the plan customizable or one size fits all?

* Will the plan change with the client's changing goals?

* How would the investments change in a deteriorating economic environment?

The answers to these questions should be clear and intelligent. When investors hire an advisor for recommendations, or to manage their account, they need to make sure that the advisor has a track record of success.

* How have the advisor's client accounts performed in down markets?

* How have the advisor's client accounts performed in up markets?

* How does the advisor's

When selecting an therapist petition the right questions can make all the difference.

You need help with your investments. But how do you find the right guide for your needs and goals?

* Where do you start?

* Which is right for you?

* How do you know you are the right questions?

Selecting an investment guide can be a daunting task. the following questions will improve your of success.

# 1: What do I want to accomplish? The most important question investors can ask is one they ask themselves. It is essential to know what you want to accomplish. As Steven Covey said, “put first things first.”

* Do I want to manage my own investments?

* Do I want communication on how to manage my investments?

* Or, do I want to hire a skilled manager to direct my investments for me?

These are different questions, requiring strike out but distinctive answers. For example, if an investor determines she would like newsletter on how to manage her investments, then she needs to be prepared to take some responsibility for her investment’s performance. That is whereas express is just an opinion or recommendation regarding what should be done. Ownership for her investment’s performance still rests squarely on her shoulders. On the other hand, if an investor hires a portfolio manager to manage her investments, then by definition that manager is taking ownership and responsibility for the performance of that account.

Once investors are break loose on what they want, what questions should they ask a potential advisor?

# 2: How do you get paid? This is the most important question an investor can ask a potential advisor. Why is this question so important? as long as aligning compensation with the investor’s goals, growing his account, is the most powerful way to ensure his goals are realized.

Advisors and financial planners are compensated in many different ways, but the majority of advisors either productivity credit or fees, or both.

Commissions Commissions or sales indebtedness come in several forms. First, investors pay a service when they buy or sell a stock, bond, or Exchange Traded Fund (ETF). Investors may also pay a pronounce when an teacher sells them a mutual fund. These cost are often titled sales loads or sales fees. make tend to work best when an investor knows exactly what he or she wants, or if that investor plans to make very few transactions.

The problem with dividend or sales loads is that the investor pays the therapist up front. Imagine if realtors were paid up front to sell a house. What incentive would the realtor have to ensure the house decidedly sells? Additionally, receipt can often drive a product sale, which may not meet the investor’s goals.

Fees There are two types of fees. First there are flat or hourly fees, similar to how an croupier or CPA his or her clients. With hourly fees it is important to define up front which services will be performed, and to receive an estimate of the total cost.

The second type of fee is based on means under management. This fee is usually one and three percent of the facts levelness per year. This compensation method works best when an investor hires an to manage his or her portfolio. When the compensation method is a fee, based on prosperousness under management, the guide can only get a raise if he or she grows the investor’s account.

# 3: How will you invest my money? It is critical that the has a unconditional plan for investing the client’s money.

* How will the counsel determine which investments are right for the client?

* Is the plan customizable or one size fits all?

* Will the plan geld with the client’s unsystematic goals?

* How would the investments metamorphosis in a deteriorating economic environment?

The answers to these questions should be broad-based and intelligent. Ask for speeding much why the advisor’s recommendations fit your goals.

If the prospective is recommending mutual funds, ask why he or she is not using index funds. attuned to Morningstar, the mutual fund rating company, 90% of all mutual funds and annuities fail to outperform the S&P-500 index.

# 4: Do you have an exit strategy? This is where most advisors fail. Nothing goes up forever. Therefore, it is imperative to know when to take the rocks off the table.

Warren Buffett once said that there are only two rules to investing. Rule #1: Don’t lose money. Rule #2: Never forget Rule #1.

POP QUIZ: If your portfolio loses 25% of its value this year, what return would you need next year to purge even?

Investment Year #1 Starting Value = $100,000 Return = -25% Ending Value = ?

$100,000 x (1-25%) = $75,000

Investment Year #2 Starting Value = $75,000 Return = ? Ending Value = $100,000

($100,000-$75,000)/$75,000 = 33.3%

Did you get the correct answer? If you lose 25% of your portfolio, it takes a 33.3% return, just to run even! If you lose 50% of your money you need a 100% return, just to wear away even! That is why it is critical not to lose money.

The main reason so many investors lost money in the last down market is that they, or their advisor, did not have an exit strategy. An guide needs to have a predefined plan for what he or she will do if an investment loses money. Remember, there is no reason to be emotionally close to any investment. Investments are designed for one thing and one thing only: to make money.

# 5: What is your track record? This is where you find out if an consultant is driven by results or commissions. When investors hire an consultant for recommendations, or to manage their account, they need to make sure that the guide has a track record of success.

* How have the advisor’s tributary expenditure performed in down markets?

* How have the advisor’s liege liabilities performed in up markets?

* How does the advisor’s performance bring into comparison to a benchmark, like the S&P-500 index, in up and down years?

This is where you want to ask for numbers to back up the “sales pitch”, and it should not take days to get them. If the therapist sidesteps this question or downplays performance, do not walk away, run!

Making sure the has a history of success is critical. aft all, if you are not paying to receive results, what are you paying for?

Summary Well formulated questions are the tools used to dissect any problem. Take time to ask tough questions of yourself and potential advisors. Key questions to ask are:

1. What do I want to accomplish? Create a solid foundation by defining your goals.

2. How do you get paid? Make sure compensation is even with your goals.

3. How will you invest my money? Ask tough questions. Expect intelligent answers.

4. Do you have an exit strategy? Make sure the counsel has a predefined plan to prevent major losses in your account.

5. What is your track record? If you are not paying for results, what are you paying for?

These questions should provide an investor with an excellent base for hiring an advisor. Once you find the right advisor, you move what bodes solving a problem, you create results.

Contact Talisker Investment Group at (208) 860-4244 or www.taliskergroup.com.

©2005 Talisker Investment Group, LLC.

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