Trusted Advisors

You have to be able to trust the advice that you receive from financial professionals. After all, they are the experts and that's why you hired them. How do you question the advice of an expert. If you are like most people, you tend to trust other people until they prove they are untrustworthy. The result is you are very dependent on the competence and ethics of advisors for the quality and trustworthiness of their advice.

Something you may not know is the financial services industry badly abuses the word "trust" based on deceptive marketing and sales practices. For example, the same companies that advertise their trustworthiness have paid billions of dollars of fines for cheating investors. Plus, every year millions of investors fire their advisors because the results they were sold don't happen. The bottom line is advertsing messages and sales pitches don't make companies and advisors trustworthy.

So how can you determine who you should trust to help you plan your financial future and invest your assets? Following are a few tips that you will you evaluate the ethics of advisors who are trying to sell you their products and services.

RIAs or IARs

There are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs) and sales representatives (reps).  

• You should always select an RIA or IAR. They are held to the highest ethical standards in the financial services industry.
• You should avoid sales representatives whose licenses limit their activities to selling you investment products
• Caution: sales reps can claim to be planners and advisors

Acknowledged Fiduciaries

There are acknowledged fiduciaries and non-fiduciaries. 

• Acknowledged fiduciaries are advisors who are required to put your financial interests first.
• Non-fiduciaries are sales reps who are not required to put your interests first.
• Caution: Sales reps will "say" your interests come first.

Documentation

Trusted advisors provide documentation for their credentials, ethics, business practices, compensation, and services.

• Sales reps can make verbal claims that they are trusted experts. That's why you want documentation. 
• Trusted advisors provide documentation because they have nothing to hide.
• Any advisor or rep who refuses to provide documentation has something to hide.

Fee Compensation

The primary method of compensation for trusted advisors is fees like other professionals you depend on for specialized knowledge and services, for example a CPA or attorney.

Competence That Delivers Results

Trusted advisors don't make verbal claims they are financial experts. They document their education, certifications, and years of experience so you know they are experts.

Sophisticated Services

The securities markets are complex and fast-moving. It takes sophisticated services to deliver competitive returns for reasonable levels of risk and expense. Trusted advisors provide services that optimize the relationship between performance and amount of risk you take to achieve results.