What to Look for when Hiring an Investment Firm

The most intimidating part of investment planning is often the very first step—sifting through investment firms and determining which one will receive your business.  

It's no stretch to say this decision is the biggest you will ever make as an investor. After all, a mistake here could cost you all of your savings and place you in a financial hole from which it may be impossible to escape. Here are some things to consider as you begin investigating investment management firms:

—Ask family and friends about the investment firms they use and for advice in your search. This is not a foolproof idea: it can be awkward to speak to family and friends about money, and tensions could arise if you have a bad experience with one of the investment management firms they recommend. But such word-of-mouth advice can at least provide a starting off point.

—Once you have whittled down the list of investment firms, investigate them. All brokers and their firms must be registered and/or licensed, per state and federal securities laws, so a quick search of the Internet and/or a phone call should determine whether or not they are legitimate. During your inquiry, also ask whether or not the broker and/or anyone involved with his or her firm has ever had trouble with the law or other investors. Failing to properly vet an investment firm may leave you with no recourse if the firm squanders your money and goes out of business. So make sure to do your homework!

—After you have identified one or more investment firms worthy of your trust, you should look into what types of securities they specialize in and see if these securities help you meet your investment goals. You should also see what sort of educational material the firm can offer as the best investment firms out there want their customers to be well versed in what they are purchasing. The sales person you work with should also help you understand what you are investing in. The more knowledge you have on both the securities you want to buy and the company you want to invest with, the happier you will be with your portfolio.

—When in doubt over with whom you should begin bond investing, it is often advisable to go with a firm with a minimum of over 30 years in the business. While all investment firms were "rookies" at some point and needed the faith of trusting investors to get them to the point they are at today, you only have one chance to make the investment a good one. Conduct a thorough investigation and carefully measure the pros and cons of each firm so that you are completely confident in the one you eventually choose!

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