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Whether you’re brand new to investing or have been doing it for years, here are some resources that can make a difference.

Investing Course

Our convenient Investing 101 e-learning course will help you get comfortable with investing. Learn how the market works and, more importantly, how to get the market to work for you.

What will I learn in this course?

This course covers investing from beginning to end. But instead of focusing on dry number stuff, we focus on the emotional and psychological aspects of investing. This is where most people make expensive mistakes.

But don’t worry: we also cover the basics like how to pick mutual funds and how to make sure you’re not paying too much in fees.

Broker, Advisor or Robo-Advisor?

Investing can seem easy, but over time, most investors lose out on most of the market’s returns. Fortunately, research shows us that those who get help tend to do better.  But since it’s your money at stake, it has to be the right help.

The investing world has changed dramatically since the days of EF Hutton.  Back then, most people used brokers.  A Broker simply executes your plans and charges you a fee for each trade.  He or she may also make recommendations to you, but acts more as a salesperson.

Today, fortunately, we have more choices.   There are online Discount Brokers, where we can save a bit of cash by having a computer carry out instructions instead of a person.

There’s an even newer option:   Robo-Advisors.    These can save us money and can provide a very cost-effective solution, especially for those just getting started.

Often, we’re better off with a full-service Financial Planner or  Advisor. They can help us avoid the emotional investment decisions that most people are subject to.  And research supports that people who use outside help save more and are more likely to achieve their financial goals.   Full-service financial planners and advisors can also help keep you accountable to your own goals, like a personal trainer for your money.  But it’s critical to find a good one!   The section below guides you through the process of finding one.

With retirement funds, you may have access to Managed Account services or Target Date Funds that can give you at least some professional help.

Or your employer may arrange discounted access to a financial planning service, who can also help review everything you own, and owe, and help you manage them for better results going forward.  For most people, that is a good way to get a checkup to make sure you’re on track, then get a specific action plan so you can be on your way to a financially secure future.

When it comes to getting professional help outside of your company’s retirement  account, you will have more choices.

But beware: with choice comes the need to be careful.

Most people simply ask their friends or family who they trust. The problem is, most people don’t know how to hire a financial advisor. So just because Aunt Maria likes her advisor and recommends him, doesn’t mean he is a  trustworthy (or even intelligent!) advisor.

Advertising doesn’t help us here either. Turn on the television and you’ll hear about all these big brand name wealth management firms. But advertising can’t tell us who will do a good job for us. And many of those big firms pay for their advertising by passing on higher fees to their clients.

See the next section for key questions to help you find a good advisor.

Thanks to Silicon Valley, today we have another option for investing outside of our retirement plans:  Robo-advisors.

A robo-advisor is an online, totally automated investment management platform.  You put in some initial information and the system will structure and manage the investing for you.

These can be great and cost-effective if you’re young and just starting out, or if you’re comfortable without a helping hand.

What robo-advisors can’t do:  is help you build good financial habits and help you make the right decisions.  They also can’t help you stay accountable to your own goals.

What about just going to a cheap online discount broker  and doing it all yourself? Well, that’s certainly an option. Think of it as a “no-frills” investing experience: you just get the ability to buy and sell investments, nothing more. No advice, no recommendations. You’re on your own for all of that. In return discount brokers normally charge discounted commissions (which is a charge for every time you buy or sell a stock or other investment).

But sometimes your commissions may add up to more than it would cost if you were to go to a robo-advisor.  With a robo-advisor, you get a turn-key solution, not just cheap trades.  The robo-advisor will make all your investment decisions for you. Even better, some of the robo-advisors currently offer either fee-free accounts or don’t charge for small accounts until they reach a certain size.

If you do want to stick with a discount broker,  you want to make sure you are educated properly and manage your money very carefully. Investing is difficult, and as research shows, most individual investors buy and sell at the wrong time. But if you do go this route, be aware that if you mess up, there’s no one to blame as these brokers have no responsibility other than to follow your instructions.

How to Find the Right Financial Help

Most people still want a human’s help with investing (and research shows this is smart). If you do, here are key questions to ask when looking for an advisor.

When we go to see a doctor or a lawyer, it is safe to assume they are qualified with the appropriate training and licenses.   Not so with financial advice. Believe it or not, anyone can hang out a shingle calling themselves a Financial Advisor.

But let’s say you end up with someone who is really a salesperson who steers you into investments they get a bigger commission on.   You still may do okay, but instead of an extra 1% per year going into your pocket, it may go into theirs. This is sometimes called “conflicted advice.” One percent doesn’t sound like too big a deal, right? Well, it’s not… until you look at the big picture, that is:

  1. Per a White House task force report, “conflicted advice” costs American consumers over $1.7 billion per year. Yes, every year.
  2. The cost of even losing 1% per year due to conflicted advice can add up to hundreds of thousands of dollars lost over a lifetime.

Fortunately, there are advisors out there who are legally required to put your interests in front of theirs.  These advisors have what’s called a Fiduciary Duty to their clients. By hiring only those who offer this fiduciary duty, you can avoid this conflicted advice, or have specific legal recourse if it were to happen to you. So, ask anyone you’re interested in working with: are you a fiduciary?

And, there’s good news, new legislation was passed in 2016 that will eventually  require anyone who works with retirement accounts to act as a fiduciary.  But implementation of the law is not clear, so until then, it’s safest to always ask or look for the mention of Fiduciary on the firm’s website.

Fees are usually easier to see and understand.   We are used to paying fees to get our hair cut, to see a doctor, or to pay an accountant or tax person. Commissions, on the other hand, makes things confusing. How do we know the advisor is picking the best product, or just steering us toward the products that he/she gets a larger commission on?

So it’s usually preferable to deal with professionals who only charge fees. Regardless, you want to at least be aware of what they charge. Many advisors will show prominently that they are fee-only, but if not, ask.  

Your money is extremely important, so you want as many layers as possible involved to protect it. While having a financial advisor is great, it’s best to have the money held by another party: preferably a large, well-known one.  Good advisors prefer that anyway as they want to focus on helping you get results, not on handling the actual money.

For example, many independent advisors will use a company like Charles Schwab or Fidelity Investments as a “custodian.” So your money is held by these big firms, which is safer. Your advisor can log in and look at your money, but can’t access it. Situations like Bernie Madoff happen when your advisor acts as a custodian as well. Avoid that!

Do they have a clean record? It goes without saying that we want anyone who works with our money to have a clean record. Fortunately we can easily look this up ourselves: finra.org/brokercheck.

This will show any disciplinary actions or any client complaints filed against the advisor. Avoid advisors with black marks on their records—go for those with a clean record.

Credentials can help ensure that the advisor knows enough to earn a specific title. But be careful: there are hundreds of questionable credentials that are used more for sales than for anything else. What counts?

A CFP (Certified Financial Planner) or Chartered Financial Analyst requires years of study and difficult testing.

A CPA (Certified Public Accountant) also has done years of study, passed difficult tests and knows a lot about taxes, which helps as well.

An RIA or IAR isn’t a credential, but means that they have passed the test and are required to be fiduciaries on your behalf.  

This site provides a quick shortcut to see if a credential is useful to you or not: https://www.paladinregistry.com/research/credentials-financial-certifications.

Just as we want our surgeon to have done the surgery we’re getting many times before they pick up a knife on us, we want those who give us financial advice to be experienced as well.  We don’t want to be part of someone else’s learning curve.

So, you want to ask how much actual experience with financial planning and money management they have.  Ideally, look for financial planners that have earned the CFP (Certified Financial Planner) designation, which requires them to meet strict experience and educational requirements.

How comfortable are you communicating with this person or team?   Money can be stressful and loaded with emotion, so we all should work with someone we are comfortable talking with.

Also, you want someone who is easy to understand. Finance is loaded with jargon. It’s your advisor’s job to explain it in a way that makes sense to you.  It’s not your job to bring a dictionary.  Good advisors speak to their clients in terms they can understand.  Don’t accept less.

Good advisors want to help empower their clients to participate, so coaching and education go hand in hand.

Bad advisors are the ones who prefer their clients be kept in the dark.

So if they’re not pro-education and willing to help you understand what your money is doing, they’re usually best avoided.

The last question to ask is about investment philosophy: how will they manage risk for you?

An advisor’s job is not that hard when the market goes up for several years, but we want to make sure they have a plan to help soften the downside for you, whenever that occurs.  Also, it’s vital that you can easily understand their investment philosophy. It was reported that none of Madoff’s clients said they understood how he managed their investments.

“You must gain control over your money or the lack of it will forever control you.”
– Dave Ramsey

Top Investing Myths

In a study by TIAA-CREF, researchers asked more than 1,000 people some questions about investing for retirement. They found out that a lot of people believed things that weren’t true.  How about you?