Grill that would-be adviser

Personal Finance

Your Money

October 10, 2006|By Eileen Ambrose | Eileen Ambrose,Sun Columnist

Peter of Baltimore e-mailed the most frequently asked question I get: How do you find a trustworthy financial adviser?

He and his wife are nearing retirement and want a professional to manage their nest egg.

"We are wary of people who have a product to sell and more interested in their commissions and benefits than producing results for us," he writes. "Can you help us in suggesting how we go about finding someone reliable and trustworthy?"

Many people realize they can't do it all on their own, yet avoid seeking help because of nagging doubts about whom to trust.

Whether the goal is college, retirement or something else, finding the right adviser does take work. And time. Sometimes more than people are willing to commit.

"You have to spend as much time picking an investment adviser as choosing the next set of tires for your car," says Melanie Senter Lubin, Maryland's securities commissioner.

Financial novices should start by reading money management books or attending financial seminars at a library or community college to learn the basics, says Brent Neiser, with the National Endowment for Financial Education in Colorado. This helps to narrow down the type of help you need and makes you a better client, he says.

Avoid seminars offering a free meal or other gift, Neiser says. These are often just sales pitches.

Once familiar with the basics, find the names of advisers in your area. Ask friends or colleagues whose finances appear in good shape for recommendations. Or, get referrals from other professionals you work with, such as a lawyer or accountant. The Financial Planning Association at and the National Association of Personal Financial Advisors at provide referrals. NAPFA is the group for fee-only planners, meaning they don't work on commission.

Check out advisers' backgrounds and any disciplinary action against them. Marylanders can call the state's securities division at 410-576-6360. Professionals who manage more than $25 million in assets are registered with the federal government, Lubin says. Check their record at

Interview at least three advisers face-to-face. "You can't be passive," Neiser says. "Quiz them."

Lubin suggests not even taking your financial papers on the first meeting with the adviser so you can focus on the interview.

One way or another, the adviser will be compensated. Ask how. It could be through a flat fee, commissions on products sold to you, a percentage of assets under management or a combination of these.

Find out the adviser's background, education and years of experience. Does the adviser work with clients like you or will you be a guinea pig? Ask to see a sample financial plan. Neiser says ask: "How do you monitor what's going on? What is the typical year in the life of the client?"

Stumped for more questions? Maryland offers an interview checklist that consumers can take along for the interview at

Ask yourself, do you feel comfortable with the adviser? This is important because you will likely discuss sensitive topics with an adviser that you wouldn't share others, Neiser says.

Don't rush.

"If this takes a year, so be it," Neiser says.

Last week's article on online longevity calculators generated this e-mail from Miriam of Baltimore:

"Read your article with interest. Went to first site mentioned in article and found out I am dead. Maybe if I start flossing every day I'll have a chance."

Not sure whether condolences or congratulations are in order.

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