This is something that makes me a bit nervous. I have been to several financial advisers and most of the time come away with a gut instinct that it is not for me.
So when I found this advice it made sense and if you spend some time verifying the back ground of your advisor I think you can safely make a calculated decision.
Here is some sound advice when deciding to choose a financial advisor:
1. Always check their credentials. Make sure they have their CFP or CFA. These are hard-earned qualifications.
2. Go to FINRA.org and SEC.gov – check to see if any regulatory actions have been taken against the ‘Advisor’. See if they have registered with your state securities department (NASAA.org)
3. Do not commit to handing over any money. If there is some pressure from your advisor “Warning Bells”
4. Question Advisor recommendations – If they recommend an investment, ask if there is a penalty for getting your money back and how much that would be, if any. Penalties usually mean commission for your Planner.
5. Have your Advisor put in writing – a. Why this investment is suitable to you? b. Total Costs per year. c. Costs should be under 1% a year. d. If the advisor says it is not necessary to give you that information, that his word is ‘gold’, it is time to get up and leave.
6. Be Sure you understand every thing - The advisor is recommending . The best way to make sure you understand is to explain it to a friend. That way you are confident that you have complete understanding, especially when they ask you questions. If there is a question you cannot answer with confidence, go ask you advisor for an explanation.
7. Ask Yourself who is making money here? – How is the planner and issuer of the product making money and you coming out with a profit also.
8. Ask your advisor if there are any other investments of better value. – Any certificates of deposit or money market accounts backed by the U.S. government are paying more than your bonds or cash are getting. Go to Depositaccounts.com or Bankrate.com to see if the advisor is giving you the correct information.
9. Is it too good to be true - The old saying “it probably is”. Be warned if you are asked to sign a document saying you have read all the hundred pages and you understood it all. Are you feeling pressured? That in itself is a warning.
10. Appearance - Is the advisor dressed well. Does he have the air of financial success. Is he neat, methodical. My Dad would say does he have clean tidy shoes. I know it sounds picky but can be a give away to his work ethic for you as a client.
Is he well-known? Is he well liked? That is also a sign of a successful person
Some times we can do all this due diligence and still get it wrong but it does cover your arse a little more than if you don’t do it.
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