Maybe you don't have the time or interest to design your own mutual fund portfolio. Fine! All sorts of financial advisors, from planners to brokers, can help you pull together a financial plan and a basket of funds that can help you achieve your goals.
Of course, this service isn't free. If you work with an advisor, you might pay an up-front fee of some sort, perhaps a percentage of your investment money. Or your advisor may forgo a fee and earn a commission by investing your money in what are called load funds. A load, or sales charge, is deducted from your investment when you buy or sell shares, depending on the fee structure. This load is used to compensate the advisor for selling you the fund. (Note that the load does not go to the fund manager; he or she receives another fee, called the management fee, which we discussed in Lesson 107.) Some advisors are fee- and commission-based, which means they'll charge you some combination of the two.
The advantages of working with an advisor are clear: You have someone helping you make financial decisions, taking care of paperwork for you, monitoring fund performance, and forcing you to stick to your investment plan for tomorrow instead of cashing in for an around-the-world jaunt today.
The drawbacks include cost, of course. There's also the challenge of finding an advisor with whom you work well, someone you can trust to put your interests before his or her own, and who will turn your financial dreams into realities, not nightmares. Further, you want to find an advisor who is willing to take the time to teach you about investing and about what he or she is doing with your portfolio. It's your money, after all, and you need to understand why it's invested the way it is.
Go-It-Alone, Version 1 >>