Investment advisor: Your Pocket, His Head

A couple of years ago, you invested a huge amount of your money in a business that seemed so promising. You learned the hard way, however, that you were wrong. You missed the chance to recover and get your money back because it was too late. Although that experience was very traumatic, now, you want to invest in another business. Before you do that, learn from your mistakes. Do not just get into something without much thinking about the risks and possible consequences of your actions. To help you consider your options, you can hire an investment advisor.

Trying to find an investment advisor can be tricky. There are so many advisors out there, all trying to woo you with their experience and qualifications. Remember that it is your money and, to a certain extent, your future, that is at stake here. You need to find a good investment advisor on whom you can depend and trust with your financial security. He or she will help you choose which investments best suit you based on your goals.

Before hiring an investment advisor, you have to identify your needs. These needs include risk tolerance, taxes and insurance needs. Once you are able to do this, you can start looking for your elusive Mr. Right Investment Advisor. It is best to hire someone that you already know --- a friend or a relative. If there is no one in your circle or family, seek references. It has to be someone you can trust. If you don't know anyone, you can still hire a good advisor if you know what to look for. First, you need to conduct an interview. Ask your potential advisor what his educational background is. Ask him about his credentials, experience, track record and investment approach as well. Ask him whatever you like. If something bothers you, fire away. You don't want to hire someone who looks like he knows what he's doing but someone who really knows what he's doing.

Another thing that you should know is how your potential investment advisor receives payment. Some advisors charge an hourly rate. Others work only on commission. Before you hire them, you need to know exactly how they plan on billing you.

Before you end your interview, ask your potential investment advisor for referrals. These are past clients who can vow that he gives excellent service and has had successful deals with clients. You can also check if there have been any disciplinary actions or complaints filed against your potential advisor.