|
One way to protect your financial interests is to ask each professional the same questions and compare their responses to each other. This strategy puts you in control of the information that you'll use to select a financial professional. When advisors control information you only hear what they want you to hear and it is difficult to compare them to each other because their information is different.
"When advisors control information you hear what they want you to hear"
We recommend you ask each advisor you interview the questions on this list. If you want an extra layer of protection require the advisors to submit their responses in writing. Once again, this puts you in control of their information. The riskiest way to select advisors or buy investment products is to base your decision on sales pitches. Verbal information is too easy to misrepresent (what they say), omit (what they don't say) and deny later (your word against theirs).
Advisors don't have track records and they don't have meaningful disclosure requirements so your questions should focus on their credentials, ethics, business practices, and services. This is objective information that will minimize the subjective nature of most selection or buying decisions.
The first four questions deal the professionals' licensing and registration.
1. Are you a Registered Investment Advisor (RIA) or Investment Advisor Representative?
2. Do you hold any securities licenses that permit you to sell investment products for commissions?
3. Do you hold any licenses that permit you to sell insurance products for commissions?
4. Do you acknowledge you are a fiduciary when you provide financial advice or services?
The next four questions deal with the sources of the professionals' knowledge. If they are real professionals they will have no problem answering your questions. If they are not real professionals you will be surprised by their answers.
5. What college(s) did you attend and what degree(s) did you earn?
6. What current industry certifications or designations do you hold?
7. How many years of pertinent financial services experience do you have?
8. Do you belong to any industry associations that have continuing education requirements?
The next five questions deal with the professionals' ethical treatment of clients.
9. Do you have any complaints from investors, companies, or regulators on your compliance record?
10. What is your CRD or IARD number so I can check your compliance record at FINRA. org?
11. Do you have an ADV that is filed with SEC.gov or a state securities commissioner? Use the professional's IARD number to access this document.
12. Do you provide clients with a written Code of Ethics that you adhere to?
13. Are you willing to provide full written disclosure for information about you (credentials, ethics, conflicts of interest, compensation)?
The next seven questions deal with the professional's business practices.
14. What company will be the custodian for my assets?
15. How are you compensated for your financial advice, sales recommendations, and services?
16. Do you provide quarterly performance reports that document the results you produce for my assets?
17. Are you willing to provide full disclosure for all of your compensation and the services you provide to earn that compensation?
18. How frequently do you meet with clients to review your results?
19. How accessible are you to your clients in an emergency?
20. Will you disclose all potential conflicts of interest that benefit you at my expense? |
