Just as you put forth the effort into researching a particular investment, you should also research all advisers and brokers you are considering before you engage in any relationship with them. When you commit to working with an expert, you should know who it is you are trusting with your financial future.
There’s a wide array of professionals willing to offer financial advice. One of the most distinctive differences in the industry is their fiduciary duty to you. Under Securities and Exchange Commission (SEC) rules, Registered Investment Advisers have a fiduciary duty to their clients. This means they must put investors’ interests before their own. Brokers are registered representatives of a brokerage firm. They, generally, have no fiduciary duty to their clients. They only have a duty to place you in suitable investments.
Before you sign an advisory agreement, you should check the history of your financial adviser. You can go to www.adviserinfo.sec.gov and search for an advisory firm or individual investment adviser. You should also read the adviser’s form ADV Part II. The ADV Part II is a public document, often used as a marketing piece for many advisers. There are several sections throughout the document, including Fees and Compensation, Brokerage Practices and Other Financial Industry Activities and Affiliations, which outlines any potential conflicts of interest. Advisers generally charge fees in one of three ways: a percentage of assets under management, on an annual basis or for an hourly or “flat-fee” basis. In 2010, the SEC required advisers to include a supplemental brochure that lists qualifications, disciplinary actions, registrations and supervisors of the individual planners in the firm.
If you prefer to handle your own planning and need someone to execute trades, you may only need a broker. They are sales agents whose job is helping investors trade stocks and other securities. Brokers are regulated by the Financial Industry Regulatory Authority (FINRA). You can check your broker’s reputation to see if they have ever had any disciplinary actions at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck.
Due diligence on your part includes researching a potential adviser’s background. You should be wary of someone who frequently changes jobs, has been convicted of a crime, or is unwilling to share their background information before you become a client. In addition to the SEC and FINRA websites, you should review a potential adviser’s online profile by reviewing the adviser’s website, social media sites, and search for recent press releases or news articles. You may also want to confirm the adviser’s designations.
Because you are seeking to develop a long-term relationship with your adviser, interview multiple financial planners. You can learn about their investment style, qualifications, expertise, and how each conducts business through these interviews. You want to choose someone with whom you feel comfortable discussing your finances. You should also ask the adviser to explain his or her investment strategy. The professional should be able to explain it in layman’s terms so that you completely understand how they intend to grow your investments.
At Henssler Financial we believe you should Live Ready, which includes understanding how to research your financial advisers. If you would like to talk to the experts at Henssler Financial you may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
