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KNOW YOUR FINANCIAL ADVISOR

Proceed with caution

  1. Before you trust a financial advisor, check the person’s background.
  2. Not all titles or credentials for retirement or senior financial planning are the same.
  3. Watch out for sales pitches disguised as “educational” seminars.

Is your advisor really an expert in your needs?

Many financial advisors call themselves senior experts to gain your trust, but not all have your best interest at heart or the right kind of training to serve you well.

Insurance agents, brokers, financial planners, and other financial professionals sometimes have titles like “retirement advisor” and “senior specialist.” There are dozens of similar-sounding titles that imply expertise in senior needs.

However, special titles do not always mean someone is qualified to help you manage your money. It is up to you to find out what the titles mean, and to check on the qualifications of the person offering you advice.

Important questions

  1. Does the title or certification your advisor uses require college-level coursework?
    1. Yes – that is good. Senior experts train in complex topics like estate planning, income tax laws, and investments.
    • No – it can be harder to know if your advisor was well-trained.
  2. Can you file a complaint if you have a problem with your financial advisor?
    1. Yes – training and education alone do not ensure ethical behavior. Organizations that grant senior financial credentials should make it easy for you to check your advisor’s complaint history and file a complaint if necessary.
    • No – if the organization granting the credential does not take complaints and share advisor history, how do you know if advisors follow the rules?
  3. Is the credential from an accredited organization?
    1. Yes – this is a good sign. This means the organization has taken important steps to ensure the quality of its training program.
    • No – beware. This is a sign that you should take a closer look at the certification.
  4. Do you know how your financial advisor is paid?
    1. Yes – some advisors earn commission fees for selling you financial products or investments, while others charge an hourly fee or flat rate.
    • No – if you are not sure, ask you advisor to explain the fees and put them in writing so you know all your costs.
  5. Is your financial advisor working in your best interest?
    1. Yes – if you are not sure, ask your advisor to put in writing any potential conflicts of interest including any situations in which your advisor will not be acting in your best interest.
    • No – consider collaborating only with advisors who will tell you in writing about any potential conflicts of interests. Make sure that you are comfortable with any conflicts.

Have you been invited to an investment seminar?

Any time you see a retirement or senior seminar advertised as “educational” or as a “workshop,” beware. The true goal may be to sell investment, insurance, or financial products at the seminar or in follow up calls.

Watch out for freebies – financial salespeople may use freebies like lunch and dinner invitations, golf trips, and country club outings to get you to come to marketing and sales events. They give you something knowing you will be more likely to give them something in return.

Watch out for high-pressure sales tactics – you may be asked to make a quick investment decision or be warned that “opportunities are limited.” Do not fall for these schemes. Good financial advisors will not rush you because it takes time to make sound investment decisions.

Watch out for exaggerated claims – if you are told about investments that make a lot of money without much risk, do not believe it. If you think an advisor made exaggerated or unrealistic claims about investment risk or returns, report this to your state securities or insurance regulator.

Check your advisor’s background

Before hiring a financial advisor, it is a clever idea to ask for references and get a background report. If a financial advisor is regulated by state or federal government, you can check the status of his or her license, and find information about professional history using these online resources:

  1. FINRA Broker Check – finra.org/BrokerCheck
  2. SEC Investment Adviser Public Disclosure Database – adviserinfo.sec.gov
  3. Your state insurance regulator – naic.org
  4. Your state securities regulator – nasaa.org
  5. FINRA Professional Designations and Organizations Locator – finra.org/designations
  6. For helpful tools and valuable information on investing – investor.gov