Choosing the right financial advisor for your retirement plan is a big decision. Ask your potential advisor to provide a sample portfolio demonstrating their investment approach. Look for low-cost index and exchange-traded funds that pay attention to tax efficiency.
Cost-Effective
When selecting an investment advisor, individuals should understand exactly how much they will be charged for services. They should find out if their fee will be flat or based on assets under management. In addition, they should also inquire about any additional fees associated with trading or advising services.
A good investment advisory firm can provide Boeing retirement plans or individualized plans suitable to participants with several tools and resources to help them save for their future. These may include simulations of potential best- and worst-case scenarios based on their financial situation. Additionally, a skilled ERISA-focused investment advisor can encourage high participation rates among employees by offering a range of educational content and seminars. They can also assist with the required nondiscrimination testing.
Access to a Wide Range of Investment Options
Many investment advisory firms offer a variety of different investments. For example, they may have a target date and asset allocation funds for participants to withdraw money in a specific year. They also typically have individual stock and bond mutual funds available to invest in.
In addition, they may offer ESG (environmental, social, governance) investing options to provide individuals with more sustainable choices. They also stay updated with changing industry standards and compliance regulations, which are important for ensuring that they meet their fiduciary obligations.
When selecting an investment advisor firm, it is helpful for individuals to check their registration and license status with the SEC’s Investment Adviser Public Disclosure website and the Financial Industry Regulatory Authority’s BrokerCheck databases. They should also ask for references and understand the communication style and investment philosophy of the advisor they are considering working with.
One-On-One Relationships
Often, investment advisory firms can offer lower fees than individual advisors can because they need to have the overhead of running their independent practice. Be sure to compare fee structures when you are preparing your RFP. Asking the bidding advisory firm to explain all the types of compensation they may receive (including fees from managed accounts and custom models and capturing plan rollovers) is another way to ensure you compare apples to apples.
In addition, a good advisory firm has clear client service protocols. From meeting report-delivery standards to promptly responding to emails and phone calls, this can make a significant difference in your experience working with the advisory firm.
Diversified Investment Portfolios
Diversification can help reduce the risk of losing a substantial amount of your investment savings while mitigating the impact of market volatility. However, diversification is a practice that requires ongoing attention and periodic adjustment.
Investors diversify by dividing their portfolios into multiple asset classes, such as stocks and bonds. But they can also diversify within those categories, for example, separating their stocks between large-cap, small-cap, and value stocks and divvying up their bond holdings by duration, investing strategy, creditworthiness, and geography.
Pooled investments, such as mutual and exchange-traded funds, provide a simple way to diversify cheaply. In addition, regular portfolio rebalancing helps to ensure that each investment has the proper proportional weight in your overall portfolio. This can prevent one asset class from over-weighting your portfolio and skewing your expected return/risk profile.
Personalized Service
Your advisor will meet with you in person and ask questions to get a clear picture of your situation. This includes your financial circumstances, short- and long-term goals, existing investments, and risk tolerance.
You’ll also want to understand how your advisor is compensated. This may include a flat investment management fee, tiering fees based on services provided, or a combination.