Final answer:
To ensure your financial advisor is creating a portfolio that benefits you, conduct background checks, ask about their investment philosophy, review their track record, and understand their fees. To verify your returns, compare against market benchmarks, monitor performance regularly, and seek a third-party opinion.
Step-by-step explanation:
When selecting a financial advisor to create a portfolio, there are several steps you can take to ensure that they are working in your best interest:
- Research and background check: Conduct research on potential advisors to verify their credentials and check for any disciplinary actions against them.
- Ask about their investment philosophy: Inquire about their approach to investing, including their strategies and how they align with your investment objectives.
- Review their track record: Ask for their past performance data to assess their ability to generate returns.
- Understand their fees and compensation structure: Discuss their fees and how they are compensated to ensure it aligns with your expectations.
To verify if your returns are realistic and acceptable, you can:
- Compare against market benchmarks: Check if your returns are in line with relevant market benchmarks for similar investments.
- Monitor performance regularly: Keep track of your portfolio's performance over time to spot any discrepancies or red flags.
- Seek a third-party opinion: Consider consulting trusted financial experts or professionals for an independent assessment of your investment performance.