With all the information and tools available for investors, many people choose to manage their own investments. However, there is also a lot to be said for investing with an investment company. The best investment companies have a team of experts that invest on your behalf. They keep up with fluctuations in the market for you, saving you time and anxiety. Investors who are easily swayed by their emotions are well-served by an investment company that can employ a more rational approach to investing. The following are some of the things you need to consider when you’re looking for an investment company.
Do the company’s financial advisers work on commission?
Unfortunately, investment companies are not obligated to recommend the best product available; rather, they operate under a standard of “suitability” that lets them sell products that earn them higher commissions. If you’re not paying fees up front, then you can be sure that your adviser is working on commission, and his or her advice may thus be biased. Make sure that you understand what your fees are paying for when you hire an adviser. Reasonable services include making a comprehensive long-range plan and recommending investment products or strategies that will help you meet your goals.
Does the company sell a wide or limited range of investment products?
Choose a company that lets you choose any investment product you want. If the investment company only offers a small range of in-house products, you can be sure you’re not getting the best possible choices. For example, consider whether you want the option to invest in bond funds, international stocks, or currencies and see if your investment company provides those services. In addition, find out the range of account types (e.g., IRA, Roth, 529 college savings, etc.) the company offers to make sure you can get what you need.
What are the fees and how will they affect your returns?
Even small fees add up over the long run, and some fees may not be visible to you if you’re not reading the fine print. For example, some investment contracts stipulate a minimum amount of activity per month in order to avoid higher fees. Bear in mind that the money you pay in fees is not only lost cash at the moment, but lost earnings over time as well.