Seems like once a week I hear some crazy story about a financial advisor ripping off a client. Like this guy.
Signing paperwork on their clients’ behalf. Using their money for personal purchases. Trading their money in crazy speculative investments. Churning. Or pushing weird investments that they get kickbacks on.
It makes me wonder: Why do people find it so hard to hire decent, ethical advisors?
I don’t know the answer, but I think you can increase your odds of working with someone you can trust if you follow a few steps.
- Look them up: Google them. Research the company they work for, or the broker-dealer they are attached to. Is it a reputable firm? Have you ever heard of it? Has it/they been in business a long time?
- Check their business reputation. Go to brokercheck and see if they have lots of business issues. If they have been in the business at least 5 years, and they are a bad one, there will be marks on their record. Conversely, if they have little or nothing on there, that’s probably a good thing.
- Obviously they should be licensed for investment or insurance products they sell, but if they’ve been in the business for any more than a couple of years, they should have some advanced education. CFP, ChFC, CLU, MSFS, and some other specific designations exist that can help you feel comfortable they at least are willing to work at being better advisors.
- Meet them through referral. Ask your accountant, lawyer or someone you think has a good head financially who they recommend.
- Meet them in person once, maybe twice before pulling the trigger. Your gut instinct about someone is usually right.
- Make sure you always understand what they are doing once you’re in the relationship. Meet at least annually and get a detailed and clear accounting of what’s going on with your money.
If you follow these steps, I think you have a pretty good chance of finding someone you can trust and work with for years, without getting ripped off.
Good luck out there!