How to Choose the Best Qualified Financial Advisor or Planner

Internet Background Check? When researching a "Financial" person to help assess, develop, and organize a long term investment strategy and portfolio, it might be prudent to interview each individual candidate either face to face or via telephone, then follow up with at least an Internet background check before you hire and sign on to a Broker/Client agency relationship. A very useful resource tool that provides a wealth of pertinent data is the NASD ( National Association of Security Dealers ) web site which is designed specifically for members and their respective clients and contains an extensive living data base to be used for educational and research purposes. With a simple "click", the client can determine if the "Financial" person he/she is considering has an acceptable NASD record untarnished by past or present pending issues. The site is called "SEC, NASD and Securities Law Information Center."

The next thing I would do is determine suitability of your "Financial Candidate" . Does he/she have the necessary license, and is he/she legally authorized to perform transactions related to the different types of financial products your interesting in purchasing for the short, mid, and long term. Essentially, you need to find the right fit so to speak, a Broker / Client relationship that will ultimately benefit both parties which includes reasonable fee based or commission compensation for the Broker, and a concrete long term investment strategy for the client supported by ongoing expert consultation. A plan containing Investments which will hopefully meet or exceed stated financial goals.

Is the "Candidate" a "Consultant"?, "Advisor"?, "Planner"?. There can be a difference in each and in some cases it's a rather substantial one, mainly related to prerequisites and educational requirements to obtain the respective license.

The preceding leads us up to the following article written especially for anyone who is currently contemplating the addition of a licensed professional to help plan an effective long term financial strategy. Like everything else, there are several aspects to consider when choosing a candidate to perform such an important task and please read on to find some of the things I typically research prior to making a decision of this magnitude.

<> Consultant - Advisor - Planner

The place where you do business can often times be a good indicator of the level of financial service provided by the staff. If you use a bank like most people, your likely to find the entire spectrum of licensed personnel, from the Series 6 "Consultant" all the way up to the "Advisor" or "Planner" ( C.F.P. Certified Financial Planner ) who possesses a more extensive license which may include the "General Securities Representative", more commonly known as the "Broker's". The distinction can be very important when considering and choosing a financial person to help you achieve your goals.

If your only interested in purchasing mutual funds or annuity products then a Series 6 licensed individual may be sufficient, however if you prefer access to a wider range of complex financial vehicles including options or high beta individual stocks, a relationship with a Series 7 licensed individual may be the better choice. Essentially a Series 6 license authorizes an individual to buy and sell Mutual Funds & Annuities both Fixed & Variable, a Series 7 license includes all the preceding and then some, including Options, Individual Stocks & Bonds, Partnerships both Limited & General etc. Essentially, a more complex investment strategy can be designed and implemented with a Series 7 licensed individual.

• To my knowledge per NASD Rules & Regulations, a person must obtain a Series 7 license to advertise as an "Advisor" or "Planner" however a Series 6 is the only prerequisite to call yourself a "Consultant" -

<> Self Study or Sponsorship?

Did your Financial Advisor candidate study and obtain his/her license independently or was he/she initially hired by an investment firm or bank that sponsored the NASD study course and test?. Although the license(s) are issued by the same regulating body there can be a significant difference in the way a person prepared for both the test and actual job duties which are mainly sales related even though in theory a person must learn a certain degree of law related material along with personal finance products. If a person studies independently, his/her individual ethical and moral foundation will be the only building blocks from which to draw upon, and the ultimate style in which that person runs day to day operations will be influenced by one person and one person only. If your candidate was sponsored by a bank or investment firm, more than likely the training from beginning to end was influenced and dictated by the company's expressed and implied standards and principles which can at times contrast with the employee or trainee.

I usually inquire about this when talking to a candidate, the answer may provide additional insight.

<> Experience Level

Don't hesitate to ask a Financial Advisor or Consultant how long he or she has been employed in the financial field, it will give you a good perspective on his/her level of real world experience and hands on knowledge of the vast array of products on the market. Per NASD guidelines a licensed person cannot embellish or enhance his/her work history or record to try and present his or herself as a more experienced or credible candidate. If asked, a licensed person must give an accurate answer in regard to tenure or years active as a licensed representative. In addition, it's perfectly acceptable within the industry to ask for references. two former or current clients you can contact to briefly inquire about the general business relationship should be sufficient to provide adequate information.

<> SEC - NASD Web Site

As briefly mentioned at the beginning of this article, one of the best places to start your research is a visit to the NASD ( National Association of Securities Dealers ) web site. Once you have obtained the potential candidates name and employer, it's a relatively easy task from there to find out relevant and important information about his/her current and past history as a licensed professional. The site is somewhat user friendly although some improvements would provide a better experience. Once you arrive at the NASD domain, the home page will prompt you to enter pertinent data related to your specific inquiry. Look to the left hand side for a menu and additional options to get started with your search.

The information that can be obtained from this invaluable site should give you an adequate business history profile which should help you with your hiring decision.

• The following is just a partial list of inquiries that will be answered by simply visiting NASD online.
  

The tips contained in this article are just the "Tip" of the iceberg so to speak during the research phase of choosing a Financial Advisor / Planner. Only your due diligence and intuition can ultimately help you decide who is the best and most qualified candidate for this very important job. In this article I've included a very small portion of data that is readily available for anyone who wishes to research a current licensed representative and candidate for hire.

- I hope you found this information helpful, please find additional personal finance articles below -

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