| Finding an Honest Investment Professional |
CNBC's Business News
offered the following advice on "Finding an Honest Investment Professional":
• |
Be aware that there is a big difference between a Broker and a
Registered Investment Advisor. Registered Investment
Advisors have a fiduciary responsibility to their clients and
are required by law to act in the best interest of their
clients. Brokers have no such responsibility.
|
• |
Do your homework research any potential investment advisor. Anyone can call
themselves an "investment advisor," "investment manager,"
"financial advisor," or other term.
|
• |
Ask if he is a
Registered Investment Advisor.
|
• |
Check an Advisor's
registration with the State Securities Regulator.
(In California, check Investment Advisors through the
California
Department of Corporations.)
|
• |
Check Brokers at
NASD.
|
| Other questions for the potential advisor |
| 1. |
Do you or your company receive any additional income or revenue for recommending
products or investments?
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| 2. |
Do you provide a fee only investment advisory service, versus commissions?
|
| 3. |
Do you have fifteen or more years in the financial services field?
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| 4. |
Who are you affiliated with?
(These should be reputable companies.)
|
| 5. |
Do you have references from long-term clients I may talk to?
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| 6. |
How often do you look at my accounts and investments?
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| 7. |
Do you provide performance reports? How often?
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| 8. |
Do you restrict my investment choices in any way or to particular products?
(Like proprietary products, products from a particular mutual fund
family, insurance products.)
|
| 1. |
Does the potential advisor have a clean compliance record?
(This should provide insight as to his integrity and trustworthiness.)
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| 2. |
Does he have an advanced degree?
If not, does he have at least a college degree?
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| 3. |
Does he balk at providing background information, references, or credentials?
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| 4. |
Does he have professional certifications that increase his level of
competency?
(Like RIA, CFA, CSA)
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