I don’t always agree with some of these life coach types and their philosophies but I thought this Marketwatch article on choosing advisers was interesting. Of course, all brokers are NOT inherently biased or unethical (not by a long shot) but I do think the brokerage model is a dying one. There are too many conflicts of interest and those conflicts often lead to advice that costs investors money. The reasons articulated in this article are why I decided to leave my broker/dealer and launch as an RIA (along with other reasons).
1. Are you a registered investment adviser?
If the answer is no, this adviser is a broker. Smile sweetly and say good-bye. If the answer is yes, he or she is required by law to be a fiduciary. But you still need to figure out if this fiduciary is wearing one hat or two. That’s because Its not enough that your financial adviser is an independent RIA. You need to be careful that the RIA is not also a broker.
3. Does your firm offer proprietary mutual funds or separately managed accounts?
You want the answer to be an emphatic “no.” If the answer is yes, then watch your wallet. It probably means they’re looking to generate additional revenues by steering you into these products that are highly profitable for them (but probably not for you).
Brian here: I may be biased but these are the exact questions a potential client should ask when looking for the right person. All the questions he poses make a ton of sense and help steer you to the appropriate adviser. These are the questions I addressed when I decided to leave the broker/dealer world.