Tarpley & Underwood
Financial Advisors, LLC
WHAT TO LOOK FOR IN A FINANCIAL ADVISOR
A Framework for Finding Someone You Can Trust.
How do you avoid the Bernie Madoffs and the Allen Stanfords? Recently, we’ve seen two supposed financial wizards revealed as charlatans. Given recent headlines about Ponzi schemes and fraud, you may be wondering - how can you avoid getting duped by an unscrupulous financial advisor?
Do a little legwork (online, that is). If you want to check out an investment advisory firm, visit www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx. This is the website at which the Securities and Exchange Commission keeps Form ADVs – the forms which reveal disciplinary actions taken against that advisory firm and/or its key employees. You can also make sure a firm is properly registered there.
If you want to check up on a specific investment advisor, go to the FINRA BrokerCheck website tool (www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm). Here you can learn about the professional backgrounds of advisors and firms through the Financial Industry Regulatory Authority (FINRA). 2
Now that we’ve mentioned that, let’s accentuate the positive. Visit the websites of the
Financial Planning Association (Search functions on both sites will allow you to find a respected independent financial advisor near you.
Why look for an independent financial advisor? Well, when you search for an independent advisor, you have a better chance of finding someone who gets paid for their advice and/or their fee-based asset management, instead of deriving the bulk of their income from trades or product sales. Many of these independent advisors set flat or hourly fees for specific services. Some earn a fee that corresponds to a small percentage of the invested assets they manage for you. If your portfolio does well, they do well.
Look for meaningful professional designations. In fact, this article is a good starting point: www.investopedia.com/articles/01/101001.asp. This explains the most respected financial services industry credentials and what it takes to earn them. These designations signify advisors committed to upholding ethical as well as professional standards.
