Charles Lewis Sizemore, CFA

There are a couple points to consider here:

1. What is the time horizon of these riskier investments? If these risky investments are ones that you intend to buy and hold for a while, it makes more sense to put them in a taxable account and to save your tax-deferred accounts for income-oriented investments that generate taxable current income. Remember, you only pay capital gains taxes when you sell.

2. How risky is "risky?" If you are talking about doing aggressive trading or a speculative strategy, you don't want to "waste" your IRA or Roth IRA on something that will blow up. Put your "real money" in a retirement account, and your "play money" in on online brokerage account with a discount broker.
   

Futures have little use as an investment vehicle for the vast majority of investors, unless you happen to be a farmer or miner hedging your production (and I KNOW that the vast majority of Brightscope readers are farmers looking for advice on how to hedge their corn crop...or not).

Options, however, have several legitimate uses:

1. Buying puts for protection: If you are worried about a market fall but don't want to accept the tax consequences of selling an appreciated position, buying a put option can offer you downside protection from a market drop. Be warned though, puts are often punishingly expensive to buy when you feel you need them most.
   

2. Selling covered calls as an income strategy: When you sell a call option against a position you already own, the worst that can happen to you is that you will be forced to sell it; and you get to pocket the premium on the option contracts you sold. A covered call strategy is considered safe enough to be allowed in IRA accounts by U.S. regulators.
   

3. Selling puts while keeping cash on hand to buy if exercised: This is a little more controversial, but if you ever wanted to own a given stock "if only it fell to THIS price...," then selling a put is a way to make that happen while also pocketing the premium. The thinking behind this strategy is better explained here: http://charlessizemore.com/christmas-may-come-early-this-year/

The comments about choosing a fee-based advisor are spot on. When an advisor is paid a fee that is based on a percentage of the assets managed, they have every incentive to grow your nest egg responsibly without taking undue risk. Here are a few other items to consider:

1. Make prospective advisors explain "what they do." How do they invest? What criteria do they look for when making an investment? Who are their role models and who/what do they read? If they can't answer these kinds of questions intelligently, then keep looking.

2. Make sure the advisor finds the time to sit down with you and LISTEN. It's sort of like looking for a spouse; if they don't do it during the courtship phase, they are not too likely to do it once the honeymoon is over. If after hearing what you have to say, it might make sense for them to put you into a standard model, or it might not. Just make sure the advisor is legitimately interested in building a relationship and not just looking for a quick sale.

3. Historical investment returns are not everything (you can't drive by looking solely in the rear view mirror), but they certainly do matter. But more important than the returns themselves are the processes that went into the decision making. Don't be afraid to grill the advisor about how they performed, and ask them about the investments they made and why. If they outperformed the market, did they do so by taking extra risk that may or may not have been appropriate? If they underperformed the market, is it because they invested more conservatively?

Most of all, be willing to call "B.S." if something the advisor says doesn't make sense. The advisor may not be intentionally lying, but communication is an important part of the job. If they can't explain something intelligibly, look elsewhere.

And finally, again using the marriage analogy, play the field before you settle down. Interview a lot of managers before settling for Mr. or Ms. Right.