Choosing the right investment advisor can be difficult. People's United Bank Chief Investment Officer and Senior Vice President John Conlon explains how to make this decision a little easier.
Q: How do go about finding the right investment advisor?
A: You want to deal with someone who understands your goals and objectives. We all have plans for the wealth we have accumulated. It could be to fund retirement, children's education, to fund healthcare, or it could be to provide a legacy for your children or a charity.
You need an advisor who can help you define and refine those objectives and structure your investments to meet those goals.
Too often people focus strictly on performance when choosing an advisor.
Q: Why is that a bad thing? Doesn't having the best performance achieve all goals?
A: Not necessarily. First, the return you get on your investments is what you are paid for accepting risk. The higher the potential return the greater the risk. The emphasis is on potential. The greater the risk also means the greater potential for loss. It also means a greater chance for volatility in your investments.
Not everyone can handle the same level of risk and not all goals and objectives have the same risk profile. If your goal is to fund retirement, as you get closer to retirement you are most likely less willing to accept risk. Once you retire and are drawing funds from your investments you are going to be willing to accept volatility. You are going to want more predictability. If you are depending on these investments for income and your account is up one year and down the next and are drawing down principal, you are not thinking about the fact that you are beating the "market". You are worried that you may outlive your assets.
It is not just investing assets, it is managing assets to meet your goals, risk profile, and cash flow needs.
The bottom line is if you are talking to an advisor who is spending more time talking about themselves, than listening to you and trying to understand your goals and objectives, then you are talking to the wrong person.
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