Overview Of Motley Stock Advisor
The Motley Stock Advisor is the safer of the two Motley Fool newsletters. By safer, I mean they focus on established companies that conservative investors might consider.
Stock Advisor is a paid subscription and was the original paid subscription Motley Fool offered back in 2002. The stocks recommended in the newsletter are typically popular stocks with a stable history. The stocks provided are expected to be held for at least five years. They are also typically predicted to meet or beat the market.
To make the Stock Advisor list, companies must meet the following:
- Have a history of beating the market over consecutive years,
- Be led by their founders
- Have little debt
- Be an industry leader in customer service and corporate culture
The Motley Stock Advisor recommends having at least 25 stocks in your portfolio, but they do all the work, aka research. All you have to do is choose among the stocks they suggest.
The subscription also includes a starter portfolio that they feel every investor should have as their foundation.
Question To Ask Yourself
What type of help are you looking for?
I just need to get started investing for my financial goals: A robo-advisor may be the best fit if you’re just starting out or only need investment management. For a low fee, these computer-based services choose and manage an investment portfolio for you. Some also offer access to financial advisors if you have questions about your investments or your goals. Robo-advisors often have low or no account minimums, so it’s easy to get started.
» Need more info? Learn about robo-advisors.
I want personalized financial advice, but don’t need to meet my advisor in person. There are a crop of services offering online financial planning for less than you’d pay a traditional in-personal financial advisor or financial consultant. These companies provide complete investment management and holistic financial planning the major difference is that you’ll meet your advisor virtually by phone or video chat rather than in a local office. Most services pair you with a dedicated advisor or certified financial planner some less-expensive options offer access to a team of advisors.
I want a local advisor or a wider array of financial advice: On the other hand, if you want in-person financial planning or have a more complex situation, you may decide a traditional local financial advisor is right for you.
Not sure? Check out our cheat sheet for how to choose a financial advisor.
Financial Advisors Who Earn Commissions
Some financial advisors make money by earning sales commissions from third parties. Among financial advisors that earn sales commissions, some may advertise themselves as free financial advisors that do not charge you fees for advice. Others may charge fees, meaning they derive only part of their income from third-party commissions.
Either way, financial advisors who earn third-party sales commissions derive some or all of their income from selling you certain financial products. If you choose to work with a financial advisor who earns sales commissions, you need to take extra care.
Commission-only advisors are not fiduciaries. They work as salespeople for investment and insurance brokerages, and are only held to suitability standards. In contrast, some fee-based financial advisors are fiduciaries, though its important to determine if theyre always acting as fiduciaries or if they pause fiduciary duty when discussing certain types of products, like insurance.
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Keep in mind, commissions arent bad in and of themselves. Theyre not even necessarily red flags.
Some financial products are predominantly sold under a commission model. Take life insurance: A fee-based planner who receives compensation for helping you purchase a life insurance policy may still have your best interests at heart when advising on other financial products.
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Do Some Research And Make A List
Read reviews from past clients to see if theyre legit.
Take some time to look into organizations and individuals in your area or online that you want to work with. Make a list of these available options. Then consider your overall goals and how well each option matches your needs.
Research your choices carefully. Find out how financially stable they are, what type of investments they’ve handled in the past, their success rates and what types of people they usually work with. The more information you have, the better. Working with a financial advisor involves an element of trust, so you want to be confident in their abilities.
Find An Advisor Who Keeps You On Track
Competency, humility, empathy are the three characteristics that make an advisor good, says Campany. Perhaps the most important characteristic is empathy. Being able to understand your clients feelings and communicate to them that you are able to address those feelings provides a level of comfort that is incredibly important to your role for them.
Many consumers underestimate the importance of an advisor for listening to their needs, but thats not the only way the advisor can ultimately address the clients specific life situation and goals. A good advisor wont just tell you what to do, but will also keep you motivated, too.
A perfect financial strategy on paper means absolutely nothing if you do not implement it, says Walsh. That is where the advisors understanding of human psychology and behavior comes into play. A good advisor should establish trust, ask probing questions, and consider the unique steps that will immediately help you become better with your money and make progress.
Sometimes the advisor might have to calm you down after a particularly grueling or exciting time in the stock market or even your life. In the end, the advisor must keep you on track to reach your goals, and sometimes that means being a psychologist.
In times of market volatility, your advisor should be a steady voice of reason, helping you to avoid emotional decisions that could lead to costly mistakes, says Sue Christoph, partner at RMB Capital in Chicago.
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Understand The Different Types Of Financial Advisors
Think of the term financial advisor as a big umbrella. Under that umbrella, youll find investment professionals, tax professionals, wealth managers, financial consultants and financial planners. All these people can call themselves financial advisors.
There are also many titles financial advisors can have depending on their specific trainings or exams theyve passed. Here are just a few:
- Certified Public Accountant
- Certified Financial Planner
- Chartered Financial Analyst
So yeah, you have optionsa lot of optionsand it can get pretty confusing. But heres what it boils down to: You want a financial advisor who has solid training and experience and who treats you with respect. A good advisor uses their knowledge to teach you and treats you like a partner. A bad advisor talks down to you and simply expects you to go along with whatever they say. No, thanks!
Difference In Stock Picks
Stock picks are the main difference when comparing Stock Advisors vs. Rule Breakers. But, again, it comes down to what youre comfortable choosing.
Do you want to invest in established companies with a proven history or companies that break the rules and are part of an emerging market?
Stock Advisor picks are stable, well-known companies, like I showed above, whereas Rule Breakers are more volatile but tend to have higher returns .
Total Stocks Coverage
When looking at the difference in stock picks, its important to note that Stock Advisors usually have over 300 stocks to choose from, whereas Rule Breakers have 200. Its not a huge difference, but its worth noting as you decide which is right for you.
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Avoid Suspicious Investment Schemes
Reputable agencies rarely provide return-on-interest figures exceeding 8%, which is considered a very good result in the investment management industry. If a financial advisor offers you higher growth rates or promises to double your funds over 12 months or less, this should be seen as a red-flag and be taken as a sign to look for another specialist.
While there are some high-risk investments potentially offering higher-than-average profitability. They usually require sufficient expertise and market knowledge to utilize which is why youre coming to an advisor in the first place. Therefore, being aware of industry averages can help you identify over-exaggerated and unrealistic results and pick an appropriate advisor for your finances.
Top 5 Tips In Choosing A Best Financial Advisor
Managing investments to grow your money is important for your financial independence. What used to be seen as investment choices in the past decade such as RD, FD, land, house are now spread in to various gold, e-gold, plots, equity, derivatives, bonds, currency, antiques etc. It is essential to tap in to investment advisor expertise to take wiser decisions.
Managing our finances is a very important part of our lives. This is because not only do we need to maintain our regular expenses, we also need to plan our insurance needs, taxation matters and also plan for our retirement. However, many of us tend to neglect our finances either because we do not have the proper knowledge or are hard pressed for time. That is a why it is very important to have a financial advisor who can sort out your financial life and help you meet your short-term and long-term goals. Here are 5 tips to choose a financial planner who is right for you.
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What Credentials Should A Financial Adviser Have
Before you officially start the process of hiring a financial adviser, you’ll want to carefully check their credentials to make sure they’re the right fit. The best way to start your research would be to check your potential adviser’s affiliated association and what credentials are required.
You can also look through directories at:
- FINRA’s BrokerCheck website or by calling FINRA’s hotline at 1-800-289-9999
- The SEC’s Investment Adviser Public Disclosure website or use the SEC Action Lookup tool to find any formal actions against individuals
- Your state securities regulator
Learn All The Financial Advisor Options
There are many different types of financial advisors, each with their own unique set of credentials and qualifications. How do you know which one is right for you? Heres a quick guide to the most common types of financial advisors to help you make an informed decision:
- Broker-dealers: salespeople who earn commissions from the financial products they sell.
- Certified Financial Planners : must pass a rigorous exam and offer financial planning services, from retirement and investment planning to insurance and estate planning.
- Financial Consultants: offers a broad range of services, from investment advice to retirement planning.
- Investment Advisors: provide advice on where to invest money and how to manage those investments.
- Robo-Advisors: an automated investment service that provides advice and portfolio management.
- Wealth Advisors: a financial advisor who provides comprehensive financial planning and wealth management services.
Hiring a financial advisor is a big decision. But, if you do your research and take the time to discover what type of financial services you would benefit the most from, you will be able to choose the best financial advisor for your specific needs.
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Determine If You Need A Financial Advisor
Financial professionals can be a big help when you’re trying to map out your future, but you don’t need to hire one to be successful with your savings and investment goals.
If your employer provides a 401, for example, many times the plan will offer the option to invest in target date funds. These types of investments will keep your retirement savings on track without too much required oversight from you or a financial professional.
You still may need additional investments, such as an individual retirement account and a taxable brokerage account. If you’re the kind of person who likes to be super hands on, you can sign up for one of the brokerage firms such as Charles Schwab and TD Ameritrade.
Yet creating and maintaining a balanced, diversified portfolio can take a lot of time and research. If that feels overwhelming, you can always work with the so-called robo-advisors, which typically manage your money for you. These platforms which include Betterment, Schwab Intelligent Portfolios, Vanguard Personal Advisor Services, Ellevest and Wealthfront are generally less expensive than working with a human financial advisor, but they may not provide the same level of customized advice and solutions.
Maybe you don’t want to map your financial future on your own, or you have a more complex financial situation, such as stock options or perhaps you help out with family financial obligations. That may require a face-to-face conversation with a human financial advisor or planner.
Are There Any Tax Implications If I Invest With You
This is a good question to keep the advisor mindful of the tax impact of any investment decision. It is important to know if there are ways to minimize taxes or fees, so that your net return could potentially be higher.
Be sure to request the tax information so that the advisor always thinks about taxes when making important decisions.
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Benefits Of Hiring A Financial Advisor
Financial advisors can be great when you are confused, emotional, or simply uninformed about various wealth management topics. Add in the fact that a majority of people cant see far enough into the future to imagine their retirement, much less plan for it, and professional advice can be very handy. A qualified advisor will ask you a lot of questionssome of them uncomfortableto get the full picture of where you want to take your life.
Once all of the details are in hand, the financial advisor can put together a plan and offer you advice on investments, retirement planning, estate planning, tax liability, and your kids college education. The breadth of the advisors knowledge can make a lot of your difficult decisions easier.
Some financial planners go further, actively helping you to buy insurance products and to invest in financial products, such as mutual funds or certificates of deposit . While not all financial advisors can actually trade securities, many can act as your liaison with a broker or money manager who does. They can also work with a trust- and estate-planning lawyer or an accountant on your behalf.
Always ask a prospective advisor if they are a fiduciary. This means that they work for you, and are legally bound to act in your financial interest.
When Should You Talk To A Financial Advisor
You can seek out financial help at any time, but its especially important to get financial guidance ahead of significant life changes. Whether youre buying a house, starting a job, getting married or having a child, these life events can have major financial implications, and some upfront financial planning can go a long way toward building a stable financial future.
Its also wise to speak with a professional if your financial situation itself has changed. Maybe your salary has increased or you inherited some money from a relative. When money starts flowing in, its a good idea to give it a positive direction otherwise, it can be all too easy to spend unnecessarily.
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Where Can I Get Free Financial Advice
Many banks and brokerages offer free online libraries of financial advice and tools, so ask your existing financial provider what is available to you. Some organizations like the Foundation for Financial Planning offer free help to people in need, including veterans and cancer patients. And while you shouldnt believe everything you read on the internet, there are tons of reputable sources for financial information online, including government resources like Investor.gov and the Financial Industry Regulatory Authority. For more resources, check out our guide to getting free financial advice.
Benefits Of A 529 Able Account
A 529 Able account offers a number of benefits, including:
- Tax Benefits: The money earned in an Able account is not subject to taxes by the state or federal government. Also, any money withdrawn from it will not be taxed if its allocated toward Qualifying Disability Expenses.
- Allows a Special Needs Child to Receive Federal Benefits: Just like a special needs trust, a 529 Able account will allow you and others to save money for a special needs childs future without impacting their eligibility for public benefits.
- Supports a Special Needs Child in an Affordable Way: When comparing the costs of setting up a 529 Able account and special needs trust, an Able account is considerably less expensive.
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What Can A Financial Professional Do For Me
In addition to making sure your money is being invested appropriately, financial advisors can be helpful in certain situations.
Circumstances that warrant the advice of a financial professional:
- You have a major change in your life, such as getting engaged, having a child or getting divorced.
- You have a financial windfall, such as winning the lottery, inheriting a large sum of money or getting promoted.
- Youre getting close to retirement.
Depending on their expertise, a financial advisor can offer a range of services to ensure youre investing and spending your money responsibly.
Some of these services include:
Where To Find An Advisor
Where to find a potential advisor match?
First, ask around word-of-mouth recommendations from family, friends and colleagues can be invaluable as a first line of vetting. Then, there are online resources, as well. The CFP Board, for example, offers a searchable online database of CFPs at LetsMakeAPlan.org and the Institute for Divorce Financial Analysts offers one for CDFAs at Institutedfa.com/find-a-cdfa.
Speaking of databases, you can further vet a financial advisor by searching for regulatory violations, customer complaints and other adverse information at two online resources: BrokerCheck, from the Financial Industry Regulatory Authority, or FINRA, and the Investment Adviser Public Disclosure website from the SEC.
It is important to interview the advisors you are considering to find the one who is the best fit for you.John Lopermanaging director, professional practice, at the CFP Board
Once you’re actually speaking to an advisor, you should have a list of questions ready. Here are 10 recommended by the CFP Board:
This is not the time to be shy, according to Loper.
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