Vetting potential financial advisers
Dan Serra / McClatchy-Tribune News Service
Published Jul 21, 2011 at 05:00AM / Updated Nov 19, 2013 at 12:31AM
As with any business, the potential for conflict between customer and business always exists. In the case of investment adviser and investor, the claim can be quite serious when a dramatic loss of money is involved. Many times the adviser is blamed, but the investor may have been able to reduce the chance of loss.
This prevention exists in the form of doing homework on an adviser before signing on as a client. Many safeguards exist to sniff out a bad adviser. First visit www.adviserinfo.sec.gov. Click on “Investment Adviser Search” and search by name or firm. You’ll find brochures describing advisers and their business.
Make sure the services offered match your needs and the fees are reasonable compared with others you search. Finally, review the disciplinary section to see if the firm or adviser has been subject to complaints or regulation violations.
Make sure you search for each adviser at the firm. Also look for the adviser’s credentials including education and professional designations, such as certified financial planner. This is a good way to evaluate the adviser’s competence.
When it’s time to meet a potential adviser, you should ask for clear disclosure on fees. When evaluating fees on investments, always ask the adviser if a similar investment has a lower fee. Advisers who act under a fiduciary duty must do what is best for you, while those who act under a suitability standard only must prove an investment was suitable, not necessarily the least expensive.