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When you make investment decisions, you've got a lot of factors to evaluate: corporate earnings, economic climate, interest rates, oil prices and so on. In fact, navigating the investment world can seem like a daunting task if you're going it alone. So, make it easier on yourself - and get the help you need.

When you work with a financial professional, you can become a better investor. Consider the following highlights of a 2004 survey of investors by the research firm of Mathew Greenwald & Associates Inc.

Investors who use a financial professional:

  • Are about 50 percent more likely than investors without financial professionals to say they are doing a very good job managing their investments
  • Are more likely to have a financial plan of action than investors without a plan
  • Are less likely to go more than 18 months without "rebalancing" their portfolios (in response to changes in their personal situation or the financial markets)

Of course, these are just the findings of one study - but many others also confirm the importance of getting financial guidance. And there are some good reasons behind these results.

For starters, a financial professional can help you quantify your goals. You might know that you want to retire at age 60, buy a vacation home and spend your time pursuing your hobbies - but do you know much retirement income you'll need to attain this lifestyle? And do you know what sort of return you'll require from your investments to provide you with this income?

A qualified financial professional has the tools and expertise to help you answer these and other key questions. And if you wanted to explore several different retirement possibilities, your financial professional could also illustrate what you'd need to do, and how you'd need to invest, to achieve these alternative outcomes.

Furthermore, once a financial professional is familiar with your needs, risk tolerance and time horizon, he or she can help customize an investment portfolio for you. And through regular reviews, your financial professional can help you stay diversified, which is essential to long-term success.

Because it's their business, financial professionals stay current on changing tax laws and investment rules - and this knowledge can pay off for you. For example, you might not have known that IRA and 401(k) contribution limits went up in 2005 - but your financial professional did.

Finding the right professional
Clearly, it can be to your advantage to use a financial professional. But how do you find the right one? Here are some questions to ask of candidates:

  • What are your credentials? Make sure a prospective financial professional has the appropriate securities licenses.
  • How do you get paid? Financial professional get paid through fees or commissions, or a combination of both. One way isn't necessarily "better" than another, but it's important for you to know the system of compensation being used.
  • How will you communicate with me? Find out when you'll receive statements and how often you'll meet in person to review your portfolio.
  • What is your investment philosophy? Different financial professional have different ways of approaching the investment process. You will need to find someone whose philosophy feels like a good fit for you.

Finding the right financial professional for your needs can take some time - but it's worth the effort.



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