Should I hire a financial advisor or a broker to begin investing?
I am 19 years old and for a while now, I've been very interested in investing. I've been doing research on how to invest, but I just can't get the information that I'm looking for. I watch a lot of videos and read, but they all provide motivation techniques instead of just cutting right to the chase. I was talking to one person and he told me to go to a financial advisor rather than a stock broker. What should I do in order to take my first step into investing and who should I invest it through? Should I hire a stock broker, a financial advisor, or should I just flat out buy a share single handed?
Great question! At your stage, I would highly consider starting with a robo-advisor. You can go to a platform like Betterment and get your start there. It is very inexpensive, they have great learning material, and make it very easy to get started.
If you're looking for financial planning along with help in investing, then reach out to a financial advisor who specializes in millennials. You can find one near you by going to xyplanningnetwork.com. All the advisors on that site specialize in younger clients, charge reasonable fees, and are considered fiduciaries.
As you get older and your accounts start to grow, I would then really consider working with an actual advisor who can do both investment management and financial planning, but for now I'd stick with a robo-advisor.
Yes, It is especially important for a young person to hire a professional. Just as in any field of discipline, it is important that you establish good fundamental basics. If you start off on the wrong track, you will develop bad habits. Habits are hard to break. You should feel as though this person is taking you under their wing as a mentor. This person should give you a big break on fees, perhaps a 75% discount. Research what they advise you to do to assure they have your best interest at hand. Hopefully, you will find a great one who wants to be your teacher. Challenge them! Ask a lot of questions! Make them earn your trust.
Congratulations on doing something that I wish everyone did, you are starting to invest at a time in your life when you have many years to build your nest-egg. The extra time over someone who doesn't start until they are 30, for example, is very, very valuable.
Keep in mind that brokers are in the business to make money. They are not teachers, they are salespeople. They aren't going to spend a lot of time with you, or give you particularly good advice, unless you have enough in your account to make it worthwhile to them. Even then, they may steer you to investment products that maximize their employer's revenue (and their share of it).
A registered advisory firm (such as the one I run) is duty-bound to act in your best interests. To the extent that an advisor has the time, he or she can help answer your questions and steer you to relevant investment literature. But we all have account minimums and can't usually take time with small accounts, since the big ones are demanding our time as well. If you are at college, check out whatever investing courses might be offered. And maybe you should post another question on Investopedia asking what the best three or four books are. In my opinion, you should get 'One Up On Wall Street' by Peter Lynch and 'A Random Walk Down Wall Street' by Burton Malkiel. Both are fabulous basic texts. Good luck, and feel free to message me privately if you have further questions.
If you are not comfortable or completely sure about what you are doing, then you should hire some help. The question becomes whom. You should question any advisor's motivation. Financial advisors and planners who are paid on a fee-only basis have fewer conflicts of interest. Another way financial planners are compensated is by the hour. Check out the Garrett Planning Network to find one of these advisors in your area. An hourly financial planner can coordinate other areas of your finances as well as helping you with starting to invest.
I would recommend starting with a fee-only financial advisor. Look for someone that charges on an hourly basis or on a retainer model. At 19, a comprehensive fee-only financial advisor who has their CFP (as opposed to a broker/dealer) can help you structure a financial plan for saving, debt, budgets, etc., in addition to investments. Because you seem interested in this, I would also recommend looking for someone that emphasizes education and can help you understand finances better. Best of luck.