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Honesty Tops Any Checklist When Looking for an Adviser

Now that more financial professionals are going to have to act in their customer’s best interest, where can you actually find someone who will really, truly, for sure do that?

It seems like a simple question, but it’s not. I’ve been around the financial planning industry for 20 years, and one of the hardest (and most common) questions I’m asked is, “How do I find an adviser who I can trust?”

I’ve tried making a list of questions you can ask that focuses on objective measures. Things like where someone works, what experience they have, how they are paid and how they are regulated. These things can all be clues, but the frustrating reality is that every checklist I’ve made has one flaw.

There is no checklist that leads to “honest.”

Rules like the ones recently released by the Labor Department requiring certain advisers, in certain situations involving people’s retirement savings, to put their clients’ interests ahead of their own help for sure. But as John Bogle, the founder of Vanguard, said years ago, “There are few regulations that smart, motivated, targets cannot evade.”

All of this confusion leads me to joke about what I call the “Secret Society of Real Financial Advisers.” But every time I mention this secret society, investors ask me where they can find them. Advisers ask how they can join.

The problem is that it’s a secret society — emphasis on the “secret” part. There are no meetings, no annual dues and no T-shirts. There is no place to find a list of members. This tongue-in-cheek society does exist, but it’s hard to find members because there is no real standard of training or care like we see in other professions. When you go to doctors, you can be reasonably sure they went to years of medical school. When you go to someone using the title financial adviser, you have no idea what you’re getting.

The bummer about this entire conversation is that you’ll end up frustrated, because I still don’t have a perfect checklist for finding a real financial adviser.


I wish I did.

I wish I could tell you with confidence that if you just Google “real financial adviser,” then voilà, there will be your list. But I just tried it, and it didn’t help. At all. This problem has gotten so bad that when I mention the existence of real financial advisers to some of my friends in the media, they react like I’m referring to fictional characters in a quaint fairy tale, like the butcher, the baker or the candlestick maker.

But I want to assure you that just because real advisers are hard to find doesn’t mean they don’t exist. There are indeed financial advisers who are real professionals. They do amazing work that absolutely changes people’s lives for the better. I have seen it.

So don’t give up your search.

Start by getting names from people you trust. Who do they work with? (And how do they know they are not being fooled themselves?) Meet with those people. Ask them many questions, including how they get paid, what training they have, what type of clients they work with. Then, ask them to please outline specifically what you will pay for the advice they give.

Don’t be bashful about these questions. Real advisers like them. This is not the time for you to worry about being rude or nosy. Remember: This person is going to be all up in your business when it comes to your money. It’s fine to ask about how advisers make theirs.

Interview more than one. Compare notes. Pay attention to how you feel about their answers. The most important thing you are looking for, by far, is total and honest disclosure. If you get the sense someone is hiding things or avoiding your questions, move on.

Some professionals are registered investment advisers. You can look them up on the Securities and Exchange Commission’s public, online database. If you’re considering working with broker-dealers, make sure you check their record on BrokerCheck, a site provided by the Financial Industry Regulatory Authority to make it easy for you to verify whether an adviser has past complaints.

After all of that, remember to take your time. There is no hurry. Real advisers will respect this. In fact, they will be doing the same thing. It should feel like this is a mutual process, with both of you trying to determine if this relationship is a good fit. You are trying to find a place to get financial advice for the rest of your life (hopefully), and they are trying to make sure they can meet your expectations. It shouldn’t feel like a trip to a car dealership.

I hope at least some of this helps in your journey to find these mythical creatures that belong to the secret society of real financial advisers. Once you find one, you will understand why the search was worth it.

This commentary originally appeared April 18 on NYTimes.com

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2016, The BAM ALLIANCE

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Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”

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