Who Can You Trust When Investing?

When it comes to investing your hard-earned money, the question often arises: who can you trust? Unfortunately, in an era where con artists and opportunistic salespeople abound, the answer is rarely an easy one. However, with the right approach and due diligence, you can find reliable and trustworthy investment advice.

Understanding the Fiduciary Rule

One of the most important lessons for new investors is the concept of a fiduciary. A fiduciary is someone who is legally obligated to act in your best interest, putting your financial security above their own profits. In the United States, this rule is particularly emphasized for retirement investments, ensuring that advisors are bound by this ethical standard. While not all investments fall under this fiduciary obligation, it’s crucial to be aware of who you are entrusting with your hard-earned money.

Taking the First Steps

Your first step should be to seek advice from a licensed broker or financial advisor. However, you can verify their legitimacy through FINRA BrokerCheck. This tool allows you to check the background and credentials of financial professionals, ensuring they are in good standing and qualified to give advice.

Begin by asking yourself some key questions. Are the people you’re considering trustworthy and experienced? Do they have a track record of success? Are they aligned with your long-term financial goals?

Identifying Reliable Advisors

In the US, there are several investment companies that are recognized for their reliability and commitment to fiduciary standards. Some notable names include:

These companies are well-established and have robust financial histories. Additionally, many of them openly advertise their commitment to being fiduciaries on their websites. For investors in other countries, a quick search online can reveal similar companies that uphold these standards.

Contacting an Investment Advisor

Once you’ve identified potential investment companies, take your search a step further by speaking directly with an investment advisor. It’s critical that you verify if they operate under a fiduciary standard. Many advisors are salespeople rather than true fiduciaries, so it’s essential to clarify this in writing.

Starting Small and Diversifying

When you decide to invest, approach it with caution and start small. Don’t invest your entire savings all at once. Even the best advisors and companies can fail, and putting all your eggs in one basket is a risky proposition. Begin by investing a portion of your savings and leave the majority in a secure, insured bank savings account. This way, you can build confidence in your advisor and still have a safety net in place.

As you grow more comfortable, gradually increase your investment amount. Remember, diversification is key. Spread your investments across different companies and sectors to minimize risk. This approach helps to protect your portfolio against market fluctuations and potential company failures.

Staying Informed

To stay ahead of the game, educate yourself on market trends and investment strategies. Many reputable investment companies offer extensive educational resources, from beginner-level tutorials to advanced investment guides. Utilize these resources to enhance your knowledge and make more informed decisions.

In conclusion, finding a trustworthy investment advisor is crucial for your financial security. By understanding the importance of fiduciary standards, verifying credentials, and diversifying your investments, you can navigate the complex world of investing with confidence.

Disclosure: I am not an investment advisor, nor do I recommend specific investment products. I am an experienced buy-and-hold long-term investor who has worked with several investment companies. My current advisor at Schwab has been a valuable resource, and I highly recommend seeking out a written confirmation of fiduciary status when working with any investment advisor.

Wishing you the best in your investment journey. Remember: your financial security is your top priority, so be proactive and thorough in your approach.