If you are looking to invest, you should consider selecting an independent financial adviser to assist you in meeting your financial goals. An independent financial adviser may assist you in avoiding typical pitfalls related to investing and allow you steer clear of issues that typically harm portfolios and lead to long-term financial straits.
Many people are not financially sophisticated enough to be capable of doing well in financial markets without assistance from an financial advisor. This may be true even if you were otherwise successful in other areas of your life, including your career, in school, or through other ventures. This often includes running a business. These skills, while important, do not necessarily allow you the opportunity to succeed in financial markets.
Why is it important to stress independent when looking for a financial adviser? Simply that an independent financial adviser will not have a vested interest in making money off of you and will rely on your continued business from providing you with good tips for investing and allocating your money. This includes diversification.
A good example of the importance of independence is shown by discussing no-load and load funds. A no-load mutual fund allows you to invest without paying an upfront fee. You should ask your independent financial adviser if there is a sales load fee on the investments. This is a charge that you pay initially for entering the fund. Basically it relates to a sales commission your independent financial adviser earns for getting you to invest in this fund. This would be for the benefit of an independent financial adviser as he will earn a commission, but not good for you as you get hit with an otherwise avoidable fee. An truly independent financial adviser will not choose this type of fund over one that provides a similar return.
If a financial advisor is not independent, he may put you toward riskier investments that allow him to earn a percentage of the profit that you earn. As such, he may be willing to take additional risks that you are not comfortable with. An independent financial adviser will work towards providing you with a more reasonable diversification to avoid the risk that you will lose in a market downturn, instead of betting on one horse to earn an outsized return if the trade pans out.
An independent financial adviser can provide you with many benefits; as mentioned above, as they will be more geared towards your long-term financial success rather than just earning a short-term profit and leaving you in dire financial straits.