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More signs that your financial advisor is bad news

The stock market is giving investors large and small considerable anxiety right now. After more than a decade of a bull market, we're seeing record drops. This is not the time for a financial advisor you can't trust or who's unqualified.

Sometimes, investors don't see the signs of a bad advisor until times get tough. However, there are some red flags you can and should be aware of no matter how healthy the market is. Let's take a look at a few:

Should you fire your financial advisor?

A smart investor is an educated investor. While you trust your financial advisors to a point, you still always have to be on the lookout for problems.

When do you know it's time to fire your financial advisor and hire a new one? Here are some of the biggest "red flags" you should know how to spot:

  1. You're concerned about self-dealing. If your financial advisor doesn't always seem to have your best interests in mind and you believe that they're benefiting on the side from your transactions, you obviously don't -- or cannot -- trust that person. Move on.
  2. They're very pushy about investments or financial products. You are ultimately in charge of your investments, and a good financial advisor will respect a client's limits. If you're being steered hard toward certain investments, you need to be suspicious of ulterior motives.
  3. They're unclear about how they are paid. Remember that "fee-only" advisors (those who make a flat fee on their services or earn a salary) aren't making more per the product like those on commission or bonuses do. That doesn't necessarily make other fee structures wrong, but you should be concerned if your financial advisor isn't candid about it.
  4. They cannot clearly explain the products they are steering you toward or the investments they want you to make. They may not even have a clear explanation as to why you should invest. Never trust a financial advisor whose best explanation is, "Trust me."

Lawsuit over name change may affect income for Kentucky fund

Many factors can affect an investment, which forces many savvy investors to be constantly vigilant for threats to brands as well as the operations and project of a company or subsidiary. There is a lot of support work that must be done to protect a brand, and that includes legal actions when some threats are identified and the situation warrants a trip to court.

A Kentucky organization is suing another entity after it allegedly created a name that created confusion among potential members and investors. The name was similar in nature to an organization tracking its lineage back to the earliest days of the executive office of the Bluegrass State's government.

Drafting a prenuptial agreement for a business partnership

In a lot of ways, a business partnership is similar to a marriage. You incur some financial and legal vulnerability for the actions and decisions of your partner. You need to ensure you are both in agreement on major issues to prevent disputes down the road. Far too many people go into the early stages of a business partnership with rose-colored glasses on, leading to problems later.

A business agreement made with a future partner who will share executive responsibility or provide funding for a business concept can help ensure that you are both on the same page and that you have systems in place to navigate conflict later in your relationship.

SeaWorld settles investor class-action suit for $65 million

Seven years ago, when the documentary Blackfish was released, many people predicted that it would lead to the end of SeaWorld. The 2013 film addressed SeaWorld's treatment of its captive orcas and the impact that captivity had on their well-being -- causing them to become neurotic and violent.

Not surprisingly, all of the negative publicity and widespread calls for boycotts had a drastic impact on the stock price of SeaWorld Entertainment. The stock value fell almost 33% in one day.

A bitcoin company is ordered to pay back investors

The U.S. Securities and Exchange Commission (SEC) announced on Feb. 19 that they have ordered a cryptocurrency company Enigma MPC to return initial coin offering (ICO) funds to its investors. The federal agency is also ordering the blockchain startup to pay fines. The SEC argues that the company violated federal securities laws when it offered its Erthereum token known as ENG up as an ICO.

Enigma MPC first put ENG up for ICO in November 2017. That initiative resulted in the company raising $45 million. The value of the tokens quickly increased then plummeted within a matter of a few short weeks. The cryptocurrency is now ranked #120 among bitcoin. The company is valued at $38 million.

What risk aversion questions should your investment advisor ask?

Your investment advisor has many different responsibilities. These are commonly referred to as their fiduciary duties. Your portfolio manager must carefully research potential trades before making them and disclose any associated risks with you before doing so. If your investment advisor makes unauthorized transactions or engages in fraud, then they may be accused of breaching their fiduciary duty and face penalties for doing so.

One thing that any good investment advisor should do when they meet with you is to ask about your financial goals. Your portfolio manager should educate you about the breadth of investment options that exist including mutual funds, bonds and stocks as well as the benefits and risks that are associated with them.

'Crypto Mom' has new proposal

The so-called "Crypto Mom", who earned her nickname because of her ardent support of cryptocurrencies, has a new plan to let firms move these digital assets. It appears to be a long shot, but it will be worth keeping an eye on it.

The woman has been called the "U.S. Securities and Exchange Commission's loudest crypto advocate" and her plan is to get around tough rules for cryptocurrency. She put a new proposal up on Thursday, Feb. 6, which asks for securities rules to be held off for the next three years, during which time coins can still be traded. Both brokers and exchanges, under this proposal, would be exempt from many of the strict regulations that apply to other types of trade with different securities and with stocks.

Kentucky governor warns for investment scams

The governor and other elected officials in Kentucky recently warned residents about a number of different scams that they need to watch out for in 2020. It sometimes feels like there are more ways to lose your money than you can count. Officials want residents to be careful at every turn.

One issue that they noted was the rise of "cryptocurrency-related investment scams." Cryptocurrency is a type of currency that can be used online, and the main form is Bitcoin. However, many different types of cryptocurrency have grown up over the last decade, and people do invest in them.

How do I select a financial adviser?

You've decided to take the plunge and hire a financial adviser. But while the bulk of people in the profession are honest, financial advisers occasionally get a bad rap.

So, as you look for someone to help you handle your money, what questions should you ask, and what qualities should you look for?

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