A: (Rick) Your question about advisors is very good one. There are so many people in the finance field claiming to be an adviser that it is hard to differentiate between them.

First, let me caution you on one point that you made about advisors who tell you their services do not "cost anything". Stay away from them. They are lying. Investment advice cost you money. The cost is either separate from the investments you are buying, or it is part of a commission imbedded in what you buy. There is no way getting around that. So, if an advisor tells you that they are "paid by the company" or "There is no charge", it is a complete nonsense answer, and you do not want to do business with that person or that company.

If the advisor is open and honest about how they get paid, then you can Here is a good rule of thumb on advisor fees. The more you pay, the less you make. Simple, but true. In my opinion, you should never pay more than 1% of assets for portfolio management. Larger accounts over $1 million should never pay more the 0.5% per year. Some advisor charge 0.25% or a flat fee. All I can tell you is that fees are coming down, so negotiate.

Once you understand how the person is paid, the next step is checking credentials. Unfortunately, anyone can become and investment advisor by registering with the State and paying a nominal fee. That’s all there is to it! Some sales jobs, like a stockbroker, require you to take a written exam first. Honestly, it is more difficult for a 16 year old to get drivers license that it is for a stockbroker or investment advisor to become registered. At least the 16 year is required to show competence on the road while and advisor or stockbroker has no requirement to show competence in their field. 

Beware of self-designated titles like Retirement Plan Specialist and Vice Presidents if Investments. These are handed out like candy at all brokerage firms. Look for solid educational credentials and certifications. The ideal advisor will have an MBA or equivalent, hold a Certified Financial Planner (CFP) or Chartered Financial Analysis (CFA) designation, and shows a genuine dedication toward continuing education.

There is so much to discuss, and so little space. So, I recommend you visit the Vanguard.com website. Go to the Plain Talk library and view a booklet titled How to Select an Investment Advisor. It is an invaluable guide.

Do I need to change the funds in my portfolio?

from Reddy

Q: I am 34 years old, married, and have one son. I am currently invested in mutual funds in Fidelity as follows:

Fidelity Stock Selector (35%)
Fidelity Blue Chip growth (15%)
Fidelity Fund (10%)
Fidelity BioTechnology (10%)
Fidelity Dividend growth (25%)

I also have Vanguard Growth and Income Fund (5%) outside my 401(k). These funds have not performed as good as I expected over the last two years. If any change is needed, I would like to do it now.

I am looking for retiring in about 22 years. What do you think?

A: (Paul) You're certainly overloaded with Fidelity funds and with 22 years until retirement, it sounds like you're committed to your plan. 

Regarding performing under your expectations, that could be arbitrary.  Are you expecting an average rate of return that's unrealistic?

Regarding the funds you've selected: The Dividend Growth Fund has been a top performer when compared within the growth category. The others funds have been sub-par within their category.

I would consider doing some comparison shopping.  The returns have been impressive over a 3 and 5 year time horizon though.  The Vanguard Growth and Income Fund also has had impressive performances but has lagged its competition.  

You're on the right track Reddy, you just need to fine tune your portfolio.