Better Business Bureau advises consumers to check any investment adviser out thoroughly before you allow him or her to invest money for you. Getting a BBB Business Review will show you whether any complaints have been filed with BBB and how the adviser or investment company responded to those complaints.
BBB offers consumers to take the following steps to find an adviser:
- Ask for referrals from friends, but check the adviser out with the BBB at bbb.org or by calling 314-645-3300 before you hire anyone.
- Check credentials. What certification does the adviser hold? The financial industry offers a wide variety of certifications, including certified financial planner or registered investment adviser, for example. Ask whether the certifications the adviser holds were obtained through an accredited organization. Does the adviser belong to a professional organization that requires members to adhere to a code of ethics?
- Who does the adviser work for? Does the adviser work for a well-known firm or is he or she operating independently? What is his or her experience? Does the organization have a physical location and appropriate licensing?
- How is the adviser paid? Does the adviser work for a fixed fee, a commission or does he or she get a percentage of what is sold? A trustworthy adviser should be able to explain his or her compensation to investors.
- Be wary of promises. Very few investments offer guaranteed returns, and many involve significant risk. An adviser should be able to explain the risks as well as potential rewards of the investments he or she is selling and match your risk tolerance to appropriate investments.
- Check accessibility. How will the adviser communicate with you after the sale? Will he or she be available, and will you get regular statements about your investments? Make sure you check those statements when you get them.
The investment industry and government agencies offer a plethora of tools and advice for investors, too. One useful tool is Brokercheck, a service of the Financial Industry Regulatory Authority. The tool can tell you whether an adviser is registered and whether he or she has been subject to any government action or discipline as well as listing an adviser’s work history.
The Consumer Financial Production Bureau, a relatively new government agency, also takes complaints against financial industry professionals and companies and has important information on investing. It recently published a report on preventing senior financial fraud, Money Smart for Older Adults.