Your financial adviser is one of the most important people in your life. He or she will help guide you toward your short and long-term financial goals by providing insight and oversight of your retirement and other accounts. However, it is important that you regularly communicate with this person to ensure that your money is being managed wisely.
Are You a Fiduciary?
If your adviser does not have a fiduciary responsibility toward yourself and your money, he or she doesn’t have to act in your best interest. Therefore, it may be possible that this person makes recommendations in the hopes of earning a large commission or a large profit for the brokerage. It may be possible to get a list of fiduciaries online or by asking a brokerage before opening an account.
How Often Will My Portfolio Be Rebalanced?
It is important that your portfolio is rebalanced on a regular basis. Ideally, this will take place at least once a year. However, if there are large movements in the market, it may be necessary to do so more often. Ensuring that your portfolio is properly weighted will make it easier to minimize taxes and other fees. It will also work to maximize annual returns.
How Will Your Advisor Manage Risk?
Your financial adviser should take steps to make sure that your portfolio is neither too aggressive or too conservative. Typically, an adviser will make recommendations based on your risk tolerance, timeline and other variables that you deem to be important. If your financial professional fails to listen to your input, it may be a sign that you need to find someone else to work with.
How Liquid Are My Investments?
In a diversified portfolio, you will have stocks or similar assets that are liquid and can be sold within minutes or hours. There will also be assets such as bonds, real estate and other assets that may take months or years to sell or redeem for the right price. Your financial adviser should be able to tell you how easy it is to liquidate your portfolio at any given time. This individual should also be able to tell you how much it will cost to buy or sell assets within your portfolio.
Even if you are happy with your current financial adviser, feel free to ask any questions that you may have. This helps you to learn more about your portfolio, which may make it easier to take a more active role in how your money is managed.
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Jamie Rasmussen says
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