How You Find Quality Advisors
The biggest decision every investor faces is the selection of a competent financial advisor they can trust. Waymire's solution helps you avoid bad advisors and select high quality professionals.
Source: Paul Farrell, JD, PhD, CBS Marketwatch columnist and noted author; Waymire is the founder of Paladin Registry and author of Who's Watching Your Money?
Sales representatives and financial advisors sell investment products and services. Both make the same claims for their expertise, ethics, business practices, and results. It is up to you to know the critical differences so you select a high quality financial professional.
Sales Representatives hold securities licenses and they are paid commissions to sell investment and insurance products. Their licensing does not permit them to provide financial advice or services. However, that does not stop some reps from telling investors they are planners or advisors because it helps them sell products.
Financial Advisors are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs). These registrations permit them to provide financial advice and ongoing services for fees. Advisors are also fiduciaries which means they are held to the highest ethical standards in the financial services industry.
The Personal Referral
One of the easiest ways to find an advisor is to ask friends, family, and associates for names. Then you hope they know the critical differences between sales reps, good advisors and bad advisors. This is rarely the case because most investors have personal relationships with their advisors so they refer them for the wrong reasons. Scam artists, like Bernie Madoff, encouraged referrals from current clients to facilitate trust. Once trust was established it was easy to sell his Ponzi scheme.
The Professional Referral
Another way to find financial advisors is to ask professionals, for example your CPA, for the names of advisors. Once again, you hope the professionals know the key differences between sales reps, good advisors and bad advisors. You also have to watch out for hidden conflicts of interest. That is because many CPAs and advisors refer clients to each other (cross referrals). Plus, many CPAs are in the financial services business so they make in-house referrals.
The Free Lunch
You may receive invitations to attend "educational" seminars that include "free" lunches. Advisors buy lunch because they have to meet you before they can sell you their products. A $15 lunch may produce thousands of dollars of income for the advisors. It pays to remember there are no free lunches.
Top 100 Advisor Lists
Several publications and websites publish "Best Financial Advisors in America" lists. Most publishers base listings on assets under management. Unfortunately, asset amounts have nothing to do with advisor competence and integrity. Most of the time, assets are a function of sales skills or a big marketing budget. If you are going to rely on these lists make sure the publishers fully disclose an objective process for determining who appears on the list.
The Internet Solution
The Paladin Registry is your online solution for finding high quality financial advisors.Paladin conducts background checks , rates advisor qualifications, produces comprehensive documentation, and certifies the accuracy of advisor data (FADD only). You can also use the Internet to conduct Google name searches for advisors and view content on their websites.