Major Red Flags

If your are selecting an advisor for the first time, you will be prone to picking the first advisor who sounds good. This tendency is typical because most investors don't know the right questions to ask and they don't know good answers from bad ones.

It's critical that you hire a quality advisor the first time. The higher the quality of the advisor you hire today, the more assets and financial security you will have later in life. On the other hand, if you turn your assets over to the wrong advisor, your entire financial future will be in jeopardy.

Following are major red flags that will help you identify the quality of the advisor you are talking to.

• Watch for advisors who try to limit your investment choices. For example, they make recommendations that limit your choices to proprietary products or particular product groups. There is a very high probability these advisors have conflicts of interest that will damage your interests.
• Watch for greed and fear presentations. On the greed side, advisors market the performance of hot products to appeal to your need for results. On the fear side, advisors market low risk products to appeal to your fear of loss. What you really need is a strategy that has the highest probability of achieving your financial goals.
• Watch for advisors who try to sell you tax deferred products inside tax deferred accounts that pay high commissions compared to other investment products. FYI, ethical advisors may also recommend annuities for this type of account, but their annuity recommendations are investor-friendly.
• Watch for advisors who claim to be investment experts, but provide no written proof. Claiming expertise is a "verbal" sales tactic that's used to win control of your assets.
• Watch for advisors who use references to prove they are experts. The reference could be a friend or family member.
• Watch for advisors who sell company credentials, but not their own. You aren't hiring a company, you are hiring a professional. This is a frequent tactic of the brand name company representatives. They want you to hire them for a company name and not their credentials, ethics, and business practices which may be lacking.