Three Things To Know When Selecting a Financial Advisor

The Security and Exchange Committee (SEC) recently proposed requiring a variety of new disclosures to be made by financial industry professionals so that investors can better understand their relationships with their service providers. In light of these proposals, we selected these three questions to ask when choosing a financial advisor.

Is the advisor an acknowledged fiduciary?

 

The SEC’s proposals recognize that not everyone in the financial services industry is a fiduciary. With ongoing duties of care and loyalty, a fiduciary is required to act in your best interest above their own financial gain when providing investment advice. Ask for credentials and acknowledgment of fiduciary status.

How is the advisor paid for their services?

 

Understand how much the advisor will be paid and how they are paid: fee-only, commission-only or a combination. Know what investment products are being suggested or used, how they are managed, and how they may impact your overall costs.

Does the advisor have any conflicts of interest?

 

Investigate the background and certifications of potential advisors. Tools like FINRA’s BrokerCheck show any complaints and years of service for registered investment advisors and brokers. Ask about industry affiliations that might cloud an advisor’s recommendations about securities or other service providers.

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