Top Priority: Education
~By Anthony Cloutier
As a financial advisor in one of the more rural parts of New Hampshire I can tell you that the one thing that nearly all investors need is education. Recently, AAPR released a study showing that retirees feel more comfortable reading a computer manual than a mutual fund prospectus at a rat of 2:1. That's outrageous considering nearly 85% of the members polled owned mutual funds on only 45% used a computer weekly!
The real problem isn't the investors it is the industry. Another Forbes Magazine study showed that when investors spent more than 10 hours per week watch or reading financial news there financial comprehension scores went down! This industry is actually making its customers dumber.
The best way to combat this financial brain drain is to find a trusted advisor. Don't just pay him to develop your plan, ask to show you how it is done. Ask why he makes the decisions he does. Find out what makes him chose one product over another. Doing this will accomplish two things. First, it will educate you on the finer points of your financial plan. Next it will teach you how to manage the plan yourself.
I am often asked by viewers of Main Street Money and by students in my classes at Granite State College; how do I chose a financial advisor?
My answer is always the same: "Forget everything else, every expert has told you. Sit down with the prospective advisor and listen. Ask yourself, does he spend more time selling or teaching? If he starts selling move on. If he wants to teach you, its a very good start"
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