Choosing a financial adviser has been likened by experts to finding a good doctor or a mechanic.
You must get to know the person, feel comfortable in your interactions and come to trust them implicitly.
Tim Dennin, a securities fraud attorney based in Northport, said a lot is at stake when hiring someone to invest your money. Credit: Newsday/J. Conrad Williams Jr.
Tim Dennin, a securities fraud attorney based in Northport, said a lot is at stake when hiring someone to invest your money. Their decisions will determine whether you can purchase a home, send a child to college, care for elderly parents or retire comfortably yourself.
“When you meet with an adviser use good common sense. If your antenna goes up, walk away,” he said.
Newsday asked Dennin and two finance professors about how Long Islanders can find a suitable financial adviser.
Where to start your search
Investment firms and banks advertise their services widely and bank branches often have an adviser on staff. But a better avenue may be asking family and friends for recommendations.
Andrew C. Spieler is a finance professor at Hofstra University’s Frank G. Zarb School of Business. Credit: Hofstra University
“Chances are you have someone in your network that uses a financial adviser that they like,” said Andrew C. Spieler, a finance professor at Hofstra University’s Frank G. Zarb School of Business and author of books on investing.
He and others said once you have three to five recommendations put the advisers’ names into Google or another internet search engine and see what comes up.
Three websites you can use to background an adviser
Robert R. Johnson, a finance professor at Creighton University’s Heider College of Business in Omaha, Nebraska, said there are at least three sites that offer valuable information about an adviser’s work history, credentials and customer complaints.
- brokercheck.finra.org from the Financial Industry Regulatory Authority Inc. offers employment history, licensing information and customer complaints.
- letsmakeaplan.org from the Certified Financial Planner Board of Standards Inc. can be used to verify whether someone is certified financial planner.
- directory.cfainstitute.org from the CFA Institute provides information about certified financial analysts in good standing.
One big question to ask before you say ‘yes’
During that first conversation, you should ask the adviser if they are a fiduciary, which means they put the client’s interests ahead of their own or that of their employer when recommending investments, Johnson said.
“If a potential financial adviser is not a fiduciary, look elsewhere…in fact, run away,” he said.
Spieler added that a reputable financial adviser will ask potential clients to complete a survey about their assets and liabilities, financial goals and tolerance for risk. They also may recommend putting money into stocks and bonds, both of which are highly regulated by the federal government.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.