"Real Estate Bits - 2"

Getting advice is easy. Getting really good financial advice can sometimes be challenging - or at least it feels that way. What you need is someone who is right for you. But what is right for you? Investors sometimes take years of trial and error to find out what they really need from an advisor. The first step is getting to know yourself and that will make it a lot easier to find someone who can give you what you need. It’s a very important relationship, but it can be as easy as these four steps:

First: You won’t know if you even need an advisor if you don’t know what one can do for you. An advisor can be your guru and a teacher if you’re intimidated about investing. Or maybe you just need someone to bounce ideas off and refine your investing calls. Others need a stern coach to steer them away from making big bets on riskier investments that they tend to regret after the fact.

Having an advisor to help you refine your plan and strategy is a great idea for anyone. And it becomes even more important to revisit and refine the plan as life throws different changes at you. Things that made sense at one point can make a lot less sense when other variables are altered. Having a second opinion can help identify those situations, even when it isn’t clear to you. In addition to bringing investment ideas to the table and helping you decide which ones to choose, an advisor will also be there to look at your decisions affect your whole financial picture, which includes taxes, insurance and estate planning.

Second: Figure out what you want and don’t want in an advisor. What is your level of sophistication? If you need a lot of advice and options, make sure your advisor has the time to give you everything you need. Some investors are more comfortable making their own decisions and rely more on their advisor to simply follow through on their instructions.

There are lots of things to consider like determining how complicated is your tax picture, for example? If tax planning is a major part of your investing strategy, make sure you have an advisor who specializes in taxation. Someone with her own business, an ex and current husband, alimony to pay, kids in college, several real estate investments and big retirement plans will have different demands from a 25-year-old college student just starting his first job.

Third: Be clear on your expectations. Get full disclosure on the advisor’s fee structure, if any, in writing. How often can you expect an update and what will it entail? How long will your advisor have to spend with you on an individual basis? How will you stay in contact and how quickly can you expect a response to your questions? Which decisions must your advisor consult you on before making a call? These are all factors that should be laid out in clear language at the start of your business relationship. Get it in writing.

Full disclosure cuts both ways. If you expect your advisor to give you the best financial advice, it would be unwise to hold back secret investments that greatly influence the way you invest the rest of your wealth.

Fourth: Accept that because it’s to do with money, your relationship will have the potential to get emotional at times. Don’t expect that getting an advisor means you will automatically hit every stock on the way up and avoid each one that is going in the opposite direction. You rely on your advisor to help you find a sensible, pragmatic approach to investing, one that will balance short, medium and long-term goals. What you should not expect is a financial advisor who will offer nothing but home run stock tips on the next breakout story in the stock market.

Keep your expectations intact. That’s why you got an advisor and put a financial plan on track in the first place. Use the relationship to get the support you need. That might mean a bit of reassurance when you’re nervous or the openness to heed some words of caution when you are tempted to get reckless with your nest egg or deviate in some other way from your plan.

Regards,

Nino Pasquariello

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