5 Quick and Dirty Questions to Pick a Financial Adviser – Kiplinger’s Personal Finance

Registered adviser, fiduciary, independent adviser, investment adviser representative, RIA, licensed, designated, unbiased, what does it all mean?  As an investor seeking an adviser, it can certainly be confounding. 

Various types of licenses, designations, financial industry jargon and affiliation options are a lot for anyone to digest.  Twenty-two years of helping people understand it all has led me to a profoundly simple list of questions to help you decide if an adviser is right for you.  Here it is:

  1. Do you know them? (Where they introduced through a trusted friend, family member or other adviser?)
  2. Do you like them?
  3. Are they patient with you?
  4. Is s/he a CFP® professional?
  5. Does s/he have at least 10 years of experience?

Five yeses to these questions will likely lead to a long-term successful relationship.  It can be that simple. 

For those seeking deeper knowledge and insight, good news! I’ve broken it down here. Here are five additional aspects to consider as part of working with a financial adviser.

1. Registered Rep, IAR or both

A representative who is registered with the Financial Industry Regulatory Authority (FINRA) brokers investments and is associated with a broker-dealer (a firm). Investments implemented by a broker are generally commissionable products, such as an A share or C share mutual fund, variable annuity, 1031 exchange product, non-traded real estate investment trusts, variable life insurance, oil and gas partnerships and real estate limited partnerships.  The advice they give must meet the suitability standard, meaning the investment must be suitable for the investor, but not necessarily the best (or least costly) choice for them.

An Investment Adviser Representative (IAR) generally works for a flat fee for planning and advice or for a percentage of assets under management.  There is no commission involved, and the IAR works as fiduciary, meaning the adviser has an ethical duty to recommend the best investments for you. 

An IAR can be associated both with Registered Investment Adviser and maintain a license with a FINRA registered broker-dealer. Or, with a stand-alone RIA that does not have a FINRA registration and therefore the adviser does not have a FINRA license (see explanation 2 below).

2. Series 6 & Series 7

Now that we know to ask if an adviser is FINRA licensed and whether s/he is an IAR for a broker-dealer’s RIA or stand-alone, it’s time to evaluate an adviser’s FINRA license, if applicable. This is public information and can found by entering his/her name on the Broker Check site: https://brokercheck.finra.org/. Two common licenses obtained to implement investment solutions are the Series 6 and Series 7.  If …….

Source: https://www.kiplinger.com/retirement/retirement-planning/604488/5-quick-and-dirty-questions-to-pick-a-financial-adviser

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