Choosing a Financial Advisor

The relationship between you and your financial advisor is an important one, and there are questions you should ask before proceeding. As with any important personal decision, you should devote time to making a careful evaluation of your situation, requirements and alternatives. It is impossible to guarantee the performance of a financial advisor, but asking the right questions can help you make the most appropriate choice for your needs. CFA Institute has created this fact sheet to answer North American investors' most commonly asked questions. You can learn more by visiting other Educated Investor fact sheets, such as Managing the Relationship Between You and Your Advisor. Additionally, investors may access Web links for investor organizations outside of North America.

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Cutting through the Confusion

Where to Turn for Help with Your Investments

There are many reasons you might want help with your investments. Perhaps you want to start a college fund for your child. Maybe you are concerned that you are not doing enough to save for retirement. Or maybe you simply feel the need to get your financial house in order.

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Defining Your Investment Objectives

Investing wisely is a function of your specific needs and goals. Each investor has different objectives that need to be met depending on age, income, planned activities, and attitudes about risk. How can you work with your investment advisor to best determine which investments are right for you? Among the important factors to consider are personal status, plans, and constraints. Some of the issues that you and your advisor should consider in defining the objectives that are right for you are listed below.

Goals and Needs. You may have specific goals and requirements that you want your investment portfolio to fulfill. For example, you may be funding college for children, business expansion, travel plans, or retirement needs. You should identify these goals and needs clearly with your investment advisor so that his or her recommendations for your portfolio can assist you in meeting them.

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CFA Institute Cautions Investors On 12 Common Mistakes

Recognizing How to Avoid Missteps is Often the Most Important Part of Creating a Successful Investment Program

By repeatedly committing one or several common investment mistakes, individual investors often prove to be their own worst enemy. Unfortunately, even seemingly simple missteps can, over time, have a dramatic impact on overall returns. Recently, CFA Institute, which administers the prestigious Chartered Financial Analyst® (CFA®) Program worldwide, asked selected members to share their perspectives on some of the most common and costly mistakes they witness individual investors make.

Among the most common mistakes:

No investment strategy. From the outset, every investor should form an investment strategy that serves as a framework to guide future decisions. A well-planned strategy takes into account several important factors, including time horizon, tolerance for risk, amount of investable assets, and planned future contributions. "At the outset, individuals should have a clear sense of what they want to accomplish and the amount of volatility they're willing to bear," said Jeanie Wyatt, CFA, CEO of San Antonio-based South Texas Money Management.

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