How to Choose an Investment Company

One of the most important decisions you will make in your life is choosing a company to invest your money with. If you take this decision too lightly and choose the wrong company, it could result in you losing a large amount of money that cripples your financial future. There seems to be no shortage of companies asking for your money and promising to give you a healthy profit if you invest with them. However, all investment companies are not created equal. There are some that have a much greater track record of success than others. Using an experienced company can provide you with a great return on your investment. How can you determine which companies have the best shot of investing your money wisely and which ones to stay away from? Here are some questions you should ask when deciding on which investment company to work with.

 1. What are your certifications, credentials and licenses?

This information will give you some valuable insight into the credibility of the person you are dealing with. If you are looking for a person to handle the management of your money, you should find a registered investment advisor (RIA). A Chartered Financial Consultant (ChFC) and a certified financial planner (CFP) both use the same core curriculum in their classes. However, a CFP designation is more difficult to achieve because the person must successfully pass a comprehensive board exam. There are certified public accountants who obtain a personal financial specialist (PSF) certification so they can begin to assist people with their financial planning needs. The certification of the person handling your money should be based on your specific needs.

2. How much do you charge, and how are your fees determined?

If the investment company does not show this information on their website, and many companies do not, you need to find out detailed information regarding the company’s fee structure before you agree to do any business with them. Many companies use a complicated fee structure with a lot of additional fees added into the fine print of the agreement, so be careful who you deal with. Do they charge a percentage for assets under management? Do they charge a planning fee?

3. What is their approach to investing?

This question is important for people who prefer a specific type of investing philosophy. For example, people who like to use low-cost funds should inquire if the investment company uses passive investments or actively managed funds. Ideally, you want to work with a company that makes investments that are in line with your goals and tolerance for risk.

4. What services does the company provide?

There are some investment companies that only have employees trained to give you investment advice. However, there are other companies that provide additional advice concerning taxes, estate planning, insurance and retirement. If you will need help with other issues in addition to investing, make sure the company you choose offers these services.

5. What is their level of contact with clients?

If you are a person who wants to have frequent contact with the person handling your money, you need to determine what the company’s procedure is. Some companies only meet with their clients once a year, while others give more frequent updates, usually on a quarterly basis.

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