If you're unhappy with your financial adviser, finding a new investment professional that you feel comfortable doing business with may take some legwork, but it doesn't have to be an onerous task.
The key is knowing where to go for help — and what questions to ask.
Start by getting recommendations from people you trust, such as family members or close friends who've had positive dealings with their advisers.
- Interview at least three professionals in person. Ask each individual about their education, career experience and familiarity in working with clients whose situations are similar to yours. There's no point in hiring an adviser who deals only with multi-millionaires or who focuses on entrepreneurs if you've got a $200,000 portfolio and you work in Corporate America.
- Also ask how the person will get compensated. An honest adviser will answer your questions in a straightforward manner, and not duck the issue of pay. He or she should clearly tell you whether their compensation is commission-driven, based on a flat fee or hourly model, or perhaps a combination.
- No matter how qualified or how charming a broker may seem, be sure to check him or her out with the Financial Industry Regulatory Authority, also known as FINRA.
FINRA maintains a database called the Central Registration Depository, or CRD. It's chock-full of information about a broker's past, including where they've worked for the past 10 years, whether the person's license or registration is up-to-date, and whether the individual has ever been fined or disciplined by regulators for financial wrongdoing. You can reach FINRA online or at 800-289-9999.
Because FINRA's records may not report all information about a broker, it's also wise to contact your state securities regulator — via the North American Securities Administrators Association, or NASAA. For example, advisers must fill out a document called Form ADV. It contains two parts, including details about a broker's services, fees and strategies. You can get that ADV form and a CRD report about your broker by calling NASAA at 202-737-0900.
Finally, don't worry that requesting a CRD report may offend a broker. As an investor, it's your right to obtain this information since you'll potentially be entrusting your money to this individual. Besides, your broker won't find out that you've checked up on them because they're not notified about your request.
Next ArticleRead This