The 5 Mistakes Every Investor Makes and How to Avoid Them, 2nd Edition

MISTAKE #5Working with the Wrong Advisor

Many investors choose to work with a financial advisor. High-net-worth investors tend to use financial advisors more than the general population. There are many different theories as to why this may be the case. Many high-net-worth households have concluded any of the following:

• They have too much to lose by making a major mistake.
• They are more likely to benefit from even minor improvements of after-tax, after-cost results.
• They are more likely to substantially benefit from noninvestment planning advice.
• They are comfortable utilizing professionals and paying for advice.
• They value their time and don't want to spend it dealing with financial decisions.
• They want someone to serve as a resource to them or their family for ongoing issues.
• They want someone to provide continuity of advice in the event of incapacity or death.

Many Americans make the mistake of waiting until they have substantial assets and then look primarily for investment help. Laying out a comprehensive road map for success early on helps investors get on the right track, pointing all efforts in the right direction. While it is true that incremental benefits do not have as much of an impact on smaller portfolios, say someone with $100,000 to invest, having a strong advisor by your side can still make a big difference toward reaching your goals. Whether you want to utilize an advisor is up to you, of course, but if you are going to use one, beware of the pitfalls.