Those of you working full time spend 25% or more of your time working to earn a living. On top of that, many of you spent significant time and money to gain the skills of your trade or profession. With all this effort made, we are amazed at how many people spend so little time on managing their hard-earned money.

The biggest money mistake you can make is not making a serious effort to make sure your money is managed effectively. Understandably, some of you don’t have the skills, knowledge or the time to manage your own finances. You have two choices. You can educate yourself by taking courses or reading or you can hire a qualified advisor to help you with your finances. And even if you hire a professional to help you, you still need at least a basic level of knowledge to evaluate the effectiveness and value of your investment advisor.

Many of you might be amazed at how much you can do yourself, by spending some time reading. In the post, we have periodically reviewed investment books that we believe provide the best advice available. See the previously published article on our website titled “Must Reads for the Do-It-Yourself Investor”. Visit our website and click on our “In the News” web page to view this and other educational articles. There are numerous other publications that provide sound money management advice.

If you seek a professional, we highly recommend that you seek out an advisor with the Certified Financial Planner® (CFP®) designation. These days, anyone can call themselves a financial planner and there are a myriad of professional designations used. The majority of news programs and magazines that discuss considerations in selecting a financial planner, recommend the CFP® credentials.

Pay special attention to how the advisor charges for his/her services. Traditionally, investment advisors made their money from commissions. Others are called “fee-based” advisors who charge clients for a percentage of the assets managed. We believe that “fee-based” services are generally preferable to commissions based services. This is because fee-based advisors have more incentive to recommend stocks and mutual funds that are in the best interest of their clients.

A relatively few advisors charge by the hour or charge fixed fees for their services. We believe this approach is superior to either commissions or fee-based services. Since the fees are more transparent and typically not biased towards any particular investment companies or products, clients tend to feel more comfortable and more in control of their investment decisions.

Whatever you do, don’t hire someone just because they are nice. They might be smiling while they pick your pocket. Make sure your advisor is qualified and honest. Ask for references and focus on the advisor’s qualifications and experience. Check their credentials and review your statements carefully to be sure you understand what you’re being charged. For more specific ways to judge your investment advisor, visit our website and see our past article titled “Is Your Financial Advisor Acting in Your Best Interest”.