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| Navigating the Advisory Jungle |
Remunerative Resources
Elizabeth Harris
01/01/2006
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1) Prospecting For Prospects
Apart from word-of-mouth
recommendations,
individuals looking for financial advisors may wish to
consult these
sources:
• Worth’s Top 100 Wealth Advisors
list is updated annually and
published in our October
issue.
• The National Association of Personal Financial Advisors’
website (www.napfa.org)
can be used to identify fee-only
financial planning
professionals.
• The Financial Planning Association’s website (www.fpanet.org) has a
database of advisors,
many of whom hold the certified financial planner
credential.
2) Detective Work
• Web-based
disciplinary databases are a boon
for individuals seeking to vet
potential advisors. You can see whether a
certified financial planner,
for example, has been disciplined by the CFP board
at www.cfp-board.org.
•
Advisors with
more than $25 million under management are required to file a
detailed
questionnaire, Form ADV, with the SEC. This documents everything from
the volume of assets an advisor oversees, to the compensation scheme
employed,
to information on any violations or disciplinary actions. You
can ask the
advisor for a copy or check the SEC’s website (www.adviserinfo.sec.gov).
• Advisors with
less than $25 million under management are regulated by
state
securities commissions, which can provide similar information. Contact
information for state securities regulators is available from the
website of the
North American Securities Administrators Association (www.nasaa.org).
• Go to www.nasdbrokercheck.com or call call
800.289.9999 to check backgrounds of NASD-registered brokers or firms.
Visitors
logged nearly 3.8 million searches and requested more than
190,000 reports in
2004, according to the NASD.
3) The
Interview
Trustworthy advisors do not mind answering detailed
questions about themselves and their businesses. Some important areas
to cover
are:
• How do you get paid, and to what extent is
your compensation scheme
negotiable?
• Have you been involved
in any client lawsuits or
arbitration hearings? What was the
outcome?
• Have you or your firm
ever been disciplined by any
regulatory or self-regulatory organization?
•
Describe a
typical client.
• What is your client retention
rate?
•
How often do you contact your clients?
• How did your
model portfolio(s) perform last year versus its benchmark(s)?
•
How
much expertise do you have in-house and how much do you
outsource?
You can find a list of other suggestions and additional
questions to ask on
the SEC’s website (www.sec.gov/investor/pubs/roadmap.htm).
 Back to Main Article: Navigating the Advisory Jungle
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