Before deciding on which financial planner or investment broker to use, do a background check.
Anyone can hang out a shingle claiming financial expertise and mesmerize you with an impressive-sounding list of affiliations and designations, so it pays to do a little research to increase the chances that the planner you choose is legitimate and right for you.
Not every planner is a certified financial planner or a chartered financial consultant, and state and federal governments do not regulate financial planners.
Ask about the planner’s education. Find out what, if any, planning designations they hold, and check with the organization that assigns the credentials to ensure they are valid.
Advisers who manage money must be registered and annually file Form ADV. An adviser who manages $25 million or more in client assets registers with the Securities and Exchange Commission, and those who manage less than $25 million register with their state securities regulator.
Ask to see their Form ADV. Look for criminal, regulatory or civil action disclosures, and check out Part II of the form, which talks about the adviser’s fees and qualifications.
You also can call the Certified Financial Planner Board of Standards in Denver at 888-237-6275 or visit its Web site at www.cfp.net to see if a financial planner has earned a credential from the board or has had any disciplinary problems. A certified financial planner typically has met certain professional and education requirements and agreed to uphold a code of ethics.
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If you are working with a securities broker, check with the NASD’s BrokerCheck program at www.nasdr.com or call 800-289-9999. BrokerCheck will tell you what the broker has been doing for the past decade, and whether a broker has been charged or convicted of a crime, reprimanded by federal regulators or is being investigated for violating securities laws.