Your best solution for finding a real financial advisor is the Internet for three reasons. First, it is easy to find financial advisors. Just enter the key words “Financial Advisor Chicago IL” and you will have thousands of choices. Second, you can use the Internet to learn a lot about the financial advisor without actually contacting the advisor. Check his website, do a Google search on his name, and view his professional profile on third party websites such as Paladin Registry (www.paladinregistry.com). And third, you can maintain your anonymity while you do this. There is no contact or sales pressure until you decide you want to make the contact.
There are other ways to find advisors but most of them create hidden risks. For example, you may ask a friend, family member, or CPA for a referral. You do not know the basis for the referral and you still have to do your homework. Keep in mind, this is how Bernie Madoff marketed his scam to investors. Referrals can be dangerous!
Real Financial Advisors
The next issue is my use of the word “Real”. You need to know there are sales representatives and there are financial advisors. Both claim to be investment experts and most sales representatives tell investors they are financial advisors. This claim reduces sales resistance and helps them sell investment products. It is very confusing. But, confusion helps sales reps sell investment and insurance products.
So who are the real financial advisors? They have three distinguishing characteristics that make them easy to identify if you ask the right questions and require written responses.
1. They are registered as Registered Investment Advisors (firms) or Investment Advisor Representatives (work for firms). This registration enables them to provide financial advice and ongoing services for fees.
2. They are financial fiduciaries. This requires them to acknowledge their fiduciary status in writing so there is no question they know you know they are acting in a fiduciary capacity. Financial fiduciaries are held to the highest ethical standards in the financial services industry.
3. They are compensated with fees like other professionals (CPA, attorney) you depend on for specialized knowledge and services. They may charge hourly or fixed fees for planning services and asset-based fees for investment services.
Fake Financial Advisors
If an advisor does not have these three characteristics he is a sales representative who is masquerading as a financial advisor. Never select an advisor or rep who uses deception to gain control of your assets. How can you trust him to provide ethical advice and services?