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How do I select a financial adviser?

On Behalf of | Jan 31, 2020 | Representing Investors |

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?

Start with these questions:

  1. How are you compensated? Your adviser should be able to give you a straightforward, specific answer. Know what you are paying for each transaction, and ask all prospective advisers how much they make for various transactions and if the commissions are folded into the fee you pay or are extra.
  2. Are you a fiduciary? Fiduciaries are legally obligated to offer advice that is best for you and to make certain disclosures. Brokers, for example, are not required by law to do so.
  3. Do you have a sales quota you must hit? That will let you know if an adviser will always offer advice about financial products with your best interest in mind or to meet an office benchmark.
  4. How much time do you devote to portfolio management? It’s important to know how often your adviser checks in on your portfolio.
  5. Do you get paid if I invest in this financial product? The adviser could be getting paid by a financial company. Ask this question: “Would you put your money in this particular investment?”
  6. How will you customize your investment strategies to fit my needs?
  7. What is your background, and what kind of credentials do you have? Certifications are required to offer investment advice for many types of services.
  8. How often will we meet, and how often will I hear from you?

Once you’ve narrowed down your selection, you can verify background information and any past discipline on the disclosure site of the Securities and Exchange Commission (SEC). If, once you’ve chosen your adviser, you believe you haven’t been given good advice, you might need to seek a legal opinion.

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