How To Check Out And Secure A Qualified Financial Advisor

Accountancy Resources

How To Check Out And Secure A Qualified Financial Advisor

Uncategorised Author: Admin


You know you need help with your finances. You have some reservations about working with anyone now because you watched your sister and brother-in-law lose thousands of dollars forever with that guy now under investigation. This was the same guy who had such a great marketing plan that made him feel like you knew him, he had a nice office in a good location and he was always so well dressed. He certainly fooled a lot of people for a while based on the rumors and articles in the local paper.

Now you are not sure what you can do to protect your financial future from some unqualified imposter, or just another product-pushing salesperson. What would you do to check out someone? If you don’t know, you are putting a lot at risk. After all it is only money–YOURS!

You could simply ask a few questions and be well on your way to knowing a lot about your potential Advisor. Once you find a good “fit”?, you will be working with this person for years, perhaps even generations so a little due diligence before you begin working together is time well spent.

Initial Questions to Ask

  1. What is your full name? Have you used any other names in the past, if yes what are they? Maiden names may come up. You will need this for fast online searches.
  2. What is your Home state for insurance licensing? What is your home state insurance licensing number? Are you licensed in any other states?
  3. Are you registered with the NASD? What is your CRD number?
  4. Do you have a website? What is it?
  5. How long have you lived here? Someone who has moved around a lot may need scrutiny to find out why they moved so often. Check prior residence cities or states for negative information.

If a person cannot readily provides these things with a short delay to perhaps pull items out of the files, cross their name off the list and quickly move on. They did not pass the first test, licensing, and willingness to disclose professional information. You either have licensing or you don’t. Licensing does not in itself guarantee quality, but it is a necessity for practicing legally. You either have community roots, or you don’t.

Log on to the following websites and read any disclosures in their profile. You are looking for past improprieties, legal charges, suspensions, or other negative issues in their file. No disclosures are a very good thing. If you see a pattern, existing problems or other negative items you are not comfortable with. Cross the name off your list and move on.

  • National Association of Securities Dealers (
  • Securities and Exchange Commission (
  • North American Securities Administrators Association (
  • National Association of Insurance Commissioners ( )

You should also browse the website address provided. Any good provider can build a professional and comforting website. Look for the words “guarantee”? in regards to any investment performance or for any unrealistic claims that are immediate red flags to investors. You may also gain more information about the person and their abilities from the items listed here.

Visit and also use your current web search engine. Type in their full professional name, or first and last names with a city or state for example and see what comes up. You may be surprised what you will find including birth records, letters to the editor, legal judgments, divorces, articles, website links, and quotes. This can be a great free fast source to quietly look someone over. You are looking for information that tells you about the quality or professional aspects of the person you are considering hiring. If you find a long list of charges at the local level for bad checks, for example, this may not be the caliber of person you prefer to handle your assets. Lack of a record does not necessarily mean the person is not high quality. It may mean they are not yet technology savvy, or they may not be very involved in activities outside of their office and a little more due diligence may be in order.

This process will likely take you less than 30 minutes if you visit all the sources above, a small-time investment for results.

If the Advisor has passed these preliminary screenings, it is time to do a short interview either on the phone or in person.

What to Ask a Potential Advisor

  1. What percentage of assets can I withdraw from my assets in retirement and not likely outlive my money? If the answer given in general is any amount over 4-5% on the high end, move on. Any amount over this has been proven time and time again to deplete a portfolio in the early years too quickly and you will run out of money in later years as a result of this poor initial liquidation strategy. Retirees now will need to plan for a 30-year retirement, something they have never had to fathom before.
  2. Will the distribution of my life insurance and investments be handled by my will? This is a trick question. Your life insurance and qualified retirement type accounts (IRA, 401(k), annuities, deferred comp, etc.) already have beneficiaries listed, so they will not go through the will for estate settlement, unless the estate is the beneficiary. If you have accounts titled POD (pay on death) or TOD (transfer on death) those too already have distribution pre-determined outside of your will. All other non-qualified investment accounts, CDs, savings accounts, checking accounts, and etc. distribution will depend on the titling in place at death and may be the only ones that are distributed according to will instructions.
  3. Does the ownership of my life insurance affect my estate plans? This is another trick question. Group life insurance and personal life insurance owned by the decedent is counted towards their estate tax calculations. If you own large life insurance policies in either or both places, while the beneficiary may receive the funds income tax-free, the estate may owe estate taxes on all or part of the proceeds paid. A good Advisor will help you determine the best ownership and distribution structure for you based on your unique situation.
  4. How long have you been licensed and in practice? You may not desire to entrust your financial future to someone who recently opened their doors.
  5. Are you a Captive or Independent Agent or Broker? A “Captive”? person is generally an employee of a particular company or firm. They are usually limited to a specific set of product offerings to choose from for all clients and may have minimum production they must maintain to stay employed with the firm. An “Independent”? person works on a broker basis and does not have production requirements on any company products they may offer, although they may have personal preferences or prefer not to work with some company’s products (if so they will generally tell you why if asked). To maintain an independent’s active securities licensing, they may have a cumulative annual minimum of total production required. If you have a preference or need more information on how they operate, now is a good time to ask for clarifications.
  6. Do you have evening or weekend appointments available? If you are not willing or able to meet during weekday business hours, you need an Advisor who can meet with you on your limited after normal business hours availability schedule.
  7. Will we meet at my home, or in your office? Most experienced and in-demand professionals you are currently working with such as Doctors, Attorneys and Banking Officers have all the resources in place that are needed in their offices for their clients’ benefit. They do not routinely make house for every client for many reasons. Exceptions are generally made in advance for those clients unable to travel for some reason. It would not be inappropriate to offer to compensate the Advisor for travel time in these special situations giving them the option to accept or decline reimbursement based on the inconvenience and travel costs they would incur to meet with you elsewhere. Often due to existing client obligations, appointments may need to be scheduled a few weeks in advance. Another point to consider, if the Advisor does come to you, please have the courtesy to instruct on-site employees not to interrupt for any reason except fire or massive blood loss, turn all the phones off during your meeting, put any animals outside and remove any other distractions so you both can focus their time on your needs only.

While this will not guarantee that you will find the perfect qualified Advisor for you, it will enable you to remove some of the non-subjective reasons for picking an Advisor that will not potentially protect you from a poor planning result. Non-subjective selections biases could include reasons such as they are “nicely dressed”?, “the office was on my way home from work”?, “The brochure has a picture of a couple that looks about our age”?, “they bought me dinner a showed us a presentation that sounded good”? or “I saw their ads in a couple of places and I recognized their brand name”?.

I repeat, after all, it is only money…YOURS! Spend a little time protecting it from being lost due to “poor advice”? received and then implemented to your detriment with unqualified assistance!