Getting Advice for Investments: Eight Things to Consider for Finding Someone You Can Trust

Barbara Marquand | guest writer for GoTalkMoney

Whether you're a beginning or seasoned investor, you can find resources on your own to help you make financial decisions, such as online leads to the best money market or CD rates and practically limitless how-to articles on managing your investments.

But you'll probably need the advice of a financial professional at some point, such as when you near retirement or confront an unexpected life change, like divorce or the death of a spouse.

So where do you turn for help?

That's a tough question, particularly in the wake of a turbulent economy when so many people have suffered from what turned out to be poor advice.

You can save yourself from a lot of trouble if you do your homework to find an ethical professional with the right skills and background to meet your needs. Here are eight things to consider:

1. Qualifications

There are a variety of different types of financial advisers, from stockbrokers to Certified Financial Planners (CFPs) to Chartered Financial Consultants (ChFCs), and their designations are something of an alphabet soup. Ask advisers about their education, certifications, licenses, and professional designations--and find out what those designations mean. Go to their professional organizations' Web sites to see what criteria they had to fulfill to achieve the designations, and in what investment areas they're qualified. Do those qualifications match your needs?

2. Services

What services do advisers offer, and how long have they been advising investors in those areas? What are their typical client profiles? Look for advisers who serve clients with needs similar to yours.

3. Background

Get references and talk to current and former clients. Check advisers' backgrounds and see if there are records of any disciplinary actions. Go to the Financial Industry Regulatory Agency's site to find information about stockbrokers, investment advisers, and insurance agents. You can also check out advisers of firms regulated by the U.S. Securities and Exchange Commission on the SEC's Web site, and you can find information on sites of professional organizations, such as the Financial Planning Association. Ask advisers what organizations they're regulated by, and go to those Web sites for information.

4. Fees for Managing You Investments

Find out how advisers charge for their services. It might be a flat fee, a percentage of assets managed, by the hour, or on a commission basis. Get an estimate of how much services will cost based on your needs.

5. Conflicts of Interest

The Certified Financial Planner Board of Standards Inc. recommends that you learn what business relationships and partnerships the adviser has with companies providing financial products and services. How would advisers benefit from recommendations they make to you? Get potential conflicts of interest in writing.

6. Performance History

Get a feel for advisers' investment managing approach. Ask how that approach will help meet your goals and ask about the adviser's track record. Remember Bernie Madoff: A history that sounds too good to be true should raise a red flag.

7. Working Relationship

Find out who will work with you. Will you consult with the adviser or other staff members of the firm? The CFA Institute suggests asking how often the adviser will communicate with you and what regular reports you will receive.

8. Written Agreement

Get a written agreement detailing the services the adviser will offer and the fee structure.

Finally, remember that no financial adviser comes with an absolute guarantee, and ultimately you're the one in charge of your investments. Make sure you understand the advice you're taking, and don't hesitate to get a second opinion for major decisions.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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