The first thing to understand in choosing a financial advisor is understanding that you do not need to know everything there is to know about the financial and investment industry. What is important to know is that there are different types of advisors and that knowing the difference between the small independent broker and the big brokerage firms with captive advisors can help you decide which is right for you.
[U]3 things every investor should know about how to choose the right advisor.[/U]
[U]Chemistry[/U]
financial professional talks over your head or talks down to you, if he/she sound as if is they are trying to impress you, or you just do not get a good vibe from them then go somewhere else.
[U]Free Lunch & Dinner Seminars[/U]
Free lunch and dinner seminars have become very popular among financial professionals. Some seminars are simply for the purpose of providing financial education to clients and the public while others are specifically designed to obtain new clients or sell financial products. Because many individuals have been taken advantage of by means of this environment, especially senior citizens, the government has begun evaluating how dinner seminars are to be conducted and supervised.
[U]Churning [/U]
Churning is a legal word that carries the following definition…“An unethical practice employed by some brokers to increase their commissions by excessively trading in a client’s account.” This practice violates the FINRA Fair Practice Rules. It is also referred to as “churn and burn,” “twisting” and “overtrading.” Such activities usually result in a higher tax bill for the investor.