Opening a brokerage account is a basic initial step for those who are going to begin investing. Modern technology has made it possible to open a brokerage account online, with minimal requirements and lower costs. All you have to do is to distinguish between which kind of account you will open, and for beginners, the choices are usually between individual retirement accounts and standard stock brokerage accounts. Online brokerage accounts are ideal for those who prize convenience and want to cut costs as they have less barriers to entry.
But for those who want to seek a more traditional path, getting the help and expertise of a financial advisor with a conventional brokerage company may seem like the more logical choice. Financial advisors are typically more costly as they provide you with personalized advice. This is something that you will have to factor into your decision when choosing if you should get a financial advisor for your investments.
Here’s more information to get you started.
Looking after your best interests
The work of financial advisors can encompass that of investment advisors and financial planners. You can narrow down your search by considering financial advisors who abide by the fiduciary rule, as this assures that they are only looking after your best interests. This also means that they are fee-only, in that your payment is their sole form of compensation. They will not earn a commission when you purchase financial products or invest in certain funds.
A matter of direction
Financial advisors will be able to walk you through the investment process. They will also curate and help you manage your portfolio. If you are debating on where and what to invest in, you will have to conduct an extensive amount of research to know what you are doing. If this strikes you as a challenge you are not willing to take on your own, financial advisors have all the technical know-how to put you at ease – although it will cost you a small percentage of your portfolio. People normally seek out the help of these professionals when they need specific direction.
When you are planning on starting small, such as with investing in the low thousands or deciding on funds for your retirement accounts, you might not actually need a financial advisor. But if you are struggling to make lofty financial decisions, juggle different goals and investments, want to overcome your debt, and anything else along those lines, hiring a financial advisor may be for you. In this way a financial advisor can add value to your investments by properly allocating funds and minimizing taxes as well. Advisors can also service you with behavioral coaching by regulating your emotions with fact-checked and proven advice based on the market.
If you find yourself somewhere in-between getting a financial advisor or going at it on your own with an online brokerage account, technology has also made room for another innovation – the robo-advisor. Powered by algorithms, robo-advisors make financial advice available instantly, more accessibly, and affordably. By answering a few questions about your financial goals, risk tolerance, and basic details, robo-advisors can create a tailored portfolio and help you manage it. Since these normally invest in funds, it may not be a wise decision if you are planning on investing in individual stocks.\
Choosing to get a financial advisor ultimately boils down to what your goals are and what you can afford. If you do choose to seek the help of a professional, consider it an investment in itself. If not, then you will learn how to navigate the market’s terrain on your own – or possibly with a robo-advisor – which may be even more rewarding. Either way, there are numerous resources out there that can help you achieve your ideal financial future.