Picking an adviser

January 07, 2007|By McClatchy-Tribune

If you're looking to hire a financial planner or adviser, you're making a decision that likely will affect your entire life. And the vast array of choices can make the decision mind-boggling.

Anyone can call himself a financial planner, says Jack Waymire, author of Who's Watching Your Money? So don't assume that having a certain title ensures skill or expertise.

You also want to be objective - don't let a planner or adviser's personality or sales skills affect your decision. You want to objectively consider three factors: credentials, ethics and business practices.

Credentials: You want to make sure the planner or adviser has financial expertise, so ask about their years of experience, what college degrees they hold, and whether they have any certifications.

A CFP (certified financial planner) is the best for planners. For advisers, ask if they are RIAs (registered investment advisers) or IARs (investment adviser representatives). RIAs own their firms, while IARs are independent contractors or are employed by an RIA.

Be sure to ask how many clients the potential planner or adviser has - successful ones generally have a lot of clients and assets.

Ethics: When reviewing potential advisers or planners, ask for their CRD (central registry depository) numbers. You can then visit NASD.org, enter the CRD number and check your potential adviser's compliance records. Be sure to check for client complaints and disciplinary actions with your state's securities and insurance commissioners as well.

You should also check criminal records, because convicted criminals can obtain securities licenses.

Finally, ask if the planner is willing to provide a full written disclosure indicating all of his or her compensation and potential conflicts of interest.

Business practices: Find out how your planner or adviser will operate. Will you pay them a fee for their services, or are they paid commissions by investment and insurance companies? You want to go with fee-based advisers and planners - they answer to you.

Find out how many times you will meet annually, whether you will have face-to-face meetings, and who will attend.

Finally, get everything in writing before you hire the adviser or planner. Verbal agreements are too easy to deny later.

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