Many people discuss their investment choices with a financial advisor. Keep in mind that there
are numerous types of advisors and many have vested interests. Stockbrokers and bank
employees usually earn a commission if they sell you certain types of investment products, even
if these products might not be the absolute best fit for your needs. Financial planners usually
charge a fee—this is often a small percentage of your portfolio’s value, much like the expense
ratio that mutual funds charge.
Sometimes, however, a planner will ask you to pay a fixed sum of money for a certain service, or
will charge an hourly rate. In general, advisors who work on a “fee-only” basis have fewer
conflicts of interest. This doesn’t mean advisors who charge commissions are bad; it’s just
something you should be aware of.
If you decide to go it on your own, you can narrow your choice of funds with an online
“screener.” This is a computer tool that researches funds based on criteria you set and produces
a list based on those criteria. Many Web sites host free screening tools. For example, you could
search for growth funds with no loads and an expense rate no higher than one percent. If the list
is too long, add more criteria to narrow it down.
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