It can be very difficult to invest on your own. While there are a few people that are truly blessed with the ability, resources, and determination to invest successfully, most people simply aren’t. This is why a financial planner can be of great value by giving you his insights to help keep you out of trouble. However, many investors don’t know how to utilize a financial planner’s know-how, due to common misconceptions on how they operate.

One common mistake that people make when seeking the assistance of a financial planner is thinking they don’t need to know anything about investing because the financial planner will take care of it all. This couldn’t be further from the truth. To have a better chance of succeeding, you need to at least have a basic understanding of what your financial planner is doing with your money. This helps both you and him to be on the same page and to be clear about the financial goals you plan to achieve.

For example, if you and your adviser are meeting up to review your portfolio, and if he is recommending that you allocate some money into a particular mutual fund, you want to know why he is making that recommendation. You want to know things such as, what is the historical volatility of that particular asset class? What is the historical return of that particular asset class? How does this recommendation fit into my short, mid, and long term goals?

These are only a few of the many questions that you should ask your financial planner every time he makes any sort of suggestion. At the very least, you should know investment principles to keep yourself from getting swindled. Unfortunately, some advisers will recommend investment products merely because they earn high commissions by selling them, even though they go against your stated goals. Some Madoff types are out to steal your money.