CHRISTINE O. ASABA writes that investors have their money to be invested, but sometimes due to limited investment know-how, a potential financial advisor is vital.
Have a comprehensible image, of who are the best advisors, and how to evaluate the talented advisors. Be watchful, never ever use amateurs, they can hoodwink you, considering Rwanda’s few qualified personnel to work in such competence.
Compliance: Ask whether or not he or she has a history of regulatory disciplinary problems. You can check on a brokers’ background.
Your confidence level: Unless you choose to use an online brokerage firm, you will be working with an individual to invest in bonds. You need to feel confident about this person’s knowledge of the market as well as his or her ability to maintain and manage a professional relationship with you.
Questions to Ask
Be well-prepared when meeting with a financial professional for the first time in order to determine whether you want to use him or her to invest in bonds. Following are some suggested questions:
• How long have you been working in this field investing in bonds for clients?
You want to know that he or she has accumulated experience in the field.
• What types of bonds do you have experience in, buying and selling for investors? For example, if you are most interested in corporate bonds, consider whether or not you want to use a broker whose background is primarily in government Treasuries.
If you are primarily interested in high-yield corporate bonds with a higher degree of credit risk, does your potential broker have more experience in lower-risk government Treasuries? %ow of anyone else in the office who may also work on your account.
• How are you paid?
As compensation for their services for bond transactions, brokers typically receive a portion of the commission charged, if any, or a portion of the dealer mark-up or markdown that is factored into the price of the bond. Some brokers may charge a flat fee based on the size of your account and your level of trading activity rather than imposing charges on each transaction.
Brokers expect experienced investors to ask questions about prices and fees. Your broker should be able to explain any transaction costs or fees to you as well as the relationship between those costs and his or her compensation. You can always ask your broker if he or she will consider negotiating commissions or prices on orders. Don’t be afraid to shop around between brokers for the best possible price.
• If you are choosing to use an online brokerage firm, find out if they charge a flat fee or if the firm charges a mark-up that is built into the price you are offered onscreen.
The wealth-building strategy is in your hands, it is after all, your assets. Determine your financial objectives, identify what types of bonds are appropriate for your portfolio, research brokers, and regularly review your investments’ performance with your financial professional advisor to stay on target. Do not leave it all to the broker!