It seems every few years there is another movie about Wall Street taking advantage of the public.  Probably the most famous one was Wall Street in 1987, when Michael Douglas played Gordon Gekko as the mentor to Bud Fox, Charlie Sheen’s character.  This came out right after the short-lived crash in 1987.

At the beginning of a New Year it seemed appropriate to discuss ways to avoid being taken advantage of in financial services.  Most professionals are honest, hard-working people.  Like many industries, it’s a small percentage of bad actors that receive the most notoriety.  However we categorize the notion of being taken advantage of in two distinct ways.  One is intentional and the other is unintentional.  Generally the intentional incidents are fairly obvious, lot’s of pressure and unrealistic promises.  The unintentional many times is more difficult to determine.

The following questions to Ask a Financial Advisor are designed to greatly reduce being taken advantage of and put you on the right track:

  1. Ask the Financial Advisor for their CRD® number.  If they don’t know what it is or won’t give it to you, move on immediately and look for another advisor.  CRD® stands for Central Registration Depository, and all licensed Financial Advisors are in it, and it is maintained by FINRA.  After receiving it, go to the FINRA website and run the number through the BrokerCheck® search.  It will give you some good background information, including any complaints filed against them.  You are then better armed to make a decision whether to move forward with the advisor.
  2. Ask them how they are compensated and whether the commissions or fees are transparent.  Amazingly many “advisors” don’t even know exactly how they are compensated, let alone what charges are levied against you, the client.  This can fall into the unintentional category mentioned earlier.  Many financial advisors are “captive,” meaning they only have limited products or services available to them.  Be careful here, as you may well end up paying much more in expenses than you realize.  We wrote about that in an earlier blog, How Investment Fees Hurt Your Money.  Also make certain you know what, if any, ongoing fees you may be charged with.  If they don’t know or can’t reasonably tell you, I would look elsewhere.
  3. Ask what certifications they have.  The gold standard in the industry is the CFP®, which stands for CERTIFIED FINANCIAL PLANNER™.   Another great designation for those in the money management area is the CFA®, or Chartered Financial Analyst.  Both have high initial standards, as well as ongoing Continuing Education requirements.  There are numerous other designations out there, some proprietary within certain companies, but we recommend these.
  4. Ask if they offer objective advice, and are there any conflicts of interest?  According to Bankrate, “A good financial adviser recommends products that best fit a client’s needs.  Clients who work with a fee-only financial planner increase the odds they will receive unbiased advice.”

Paying attention to these 4 questions is not a guarantee you will be well served, but certainly puts you on the right path.  A unique option we offer at Financial Freedom Planners is BUILDING A BRIGHTER FINANCIAL FUTURE™, a process totally focused on your best interest.  Call us.  We can help!

Remember:  It doesn’t take a fortune to build one!


About Charles Roberts, CFP®

Founder & CEO, Financial Freedom Planners™
This entry was posted in Financial Advisor, Financial Planner and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.


  1. oszust says:

    This website definitely has all the information I needed concerning this subject and didnt know who to ask.

  2. klamca says:

    Heya excellent website! Does running a blog such as this take a massive amount work? Ive no understanding of computer programming but I had been hoping to start my own blog soon. Anyways, should you have any suggestions or tips for new blog owners please share. I know this is off topic however I just had to ask. Thanks!

  3. Pingback: How to Find a Financial Advisor If You’re Not Rich | Financial Freedom Planners

  4. Pingback: WHAT YOUR FINANCIAL ADVISOR DOESN’T WANT YOU TO KNOW | Financial Freedom Planners

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