‘A big, big red flag.’ Do this kind of deep dive on any potential financial adviser you want to hire
Putting someone in charge of your finances isn’t a job that should be awarded without a proper vetting process. Indeed, as Jen Grant, a certified financial planner at Perryman Financial Advisory, notes: Trusting a professional with your finances is comparable to trusting your doctor with your health — it’s a must. And that means looking into their background and qualifications, experts say. (You can use this tool from SmartAsset to get matched with a planner who meets your needs.)
One of the simplest and easiest ways for an individual to do their due diligence when researching a potential financial adviser is through the Investment Adviser Public Disclosure website or through third party websites like BrokerCheck, says Luis Strohmeier, certified financial planner at Octavia Wealth Advisors. This allows individuals to search the adviser’s registration records to ensure that the adviser they’re considering hasn’t had so-called disclosure incidents, which “would include being disbarred, having client complaints or being involved in suspicious activity,” says Strohmeier.
With tools like this, Strohmeier says there’s no need to spend money to engage a search firm to complete an official background check. “If you’d like to learn a little more about the adviser before you engage in the interview process, doing a check on their registration history, as a deep dive through the means previously mentioned, is advisable,” says Strohmeier.
Many individuals looking for financial help likely want a certified financial planner (CFP) or, if you want help with taxes, a certified public accountant (CPA), as MarketWatch Picks reported recently: And “just because someone says they’re a financial planner doesn’t mean they’ve taken the exams that qualify them to be a certified financial planner or CFP. They may have other licenses, such as the Series 7, that allow them to sell financial products, but that’s not the same.” Look up a financial advisers’ licenses and years of experience on brokercheck.finra.org and double check CFP credentials at CFP.net. (You can use this tool from SmartAsset to get matched with a planner who meets your needs.)
Do these checks even when you’ve been referred to a financial adviser by a friend or family member, says John Loper, certified financial planner and managing director of professional practice at the CFP Board. “In conducting your background check, at the outset you want to make sure you capture a financial adviser’s public disciplinary history, qualifications and credentials, years of experience and other licenses they hold,” says Loper. What’s more, if you find something that doesn’t seem good, dig in deeper. Indeed, if your potential adviser has been reprimanded or is under litigation, Grant says this is, “a big, red flag.”
Even if their record comes up clean, you should still do a little more diligence. Some of the most valuable insights you can gain on a financial adviser actually stem from the interview process, experts say. Here are the 15 questions you should ask any financial adviser you want to hire. Beyond those questions, there are other surprising things you may want to investigate, including their social media, and these other items. And finally, go with your gut: If it doesn’t feel right, don’t do it. (You can use this tool from SmartAsset to get matched with a planner who meets your needs.)
