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How to Choose the Best Qualified Financial Advisor or Planner

Updated on October 25, 2017

Internet Background Check? When researching a "Financial" person to help assess, evaluate, develop, and organize a long term investment strategy and initial portfolio, it might be prudent to interview each individual candidate either face to face or via telephone, then follow up with at least an Internet background check before you hire and sign on to a binding Broker/Client agency relationship. A very useful resource tool which provides a wealth of pertinent data stored in a generous electronic retrieval system, is the NASD ( National Association of Security Dealers ) web site which is designed specifically for members and respective clients who wish to gain access to available public historical archives to confirm legitimacy, and or research past performance of any given Registered Representative, Financial Advisor, or Consultant. This site contains an invaluable, extensive living data base to be utilized for educational and investigative research purposes. With a simple "click", the client can immediately determine if the "Financial" person he/she is considering has an acceptable NASD record untarnished by past or present pending issues. The site is called "SEC, NASD and Securities Law Information Center."

The next vitally important aspect I would pursue and investigate as an interested potential client, is determine suitability of the "Financial Candidate". Does he/she have the necessary license, and is he/she legally authorized to perform transactions related to the different types and classifications of financial products you're interesting in purchasing for the short, mid, and long term? Although not essential, you should strive to find the right fit so to speak, a Broker / Client relationship that will ultimately benefit both parties. A partnership which includes reasonable fee based or commission compensation for the broker, and a concrete, long term investment strategy outlined in good faith for the client which is supported by ongoing expert consultation. Essentially, a well conceived plan containing suitable Investments which will hopefully meet or exceed stated or projected financial goals.

Is the "Candidate" a "Consultant"?, "Advisor"?, "Planner"?. There can be differences in each, and in some cases it can be rather substantial in fundamental nature. Primary considerations are related to prerequisites and educational requirements to obtain each respective license.

The preceding leads us up to the following article which was drafted for everyone who is interested in learning more about the subject, but especially for those individuals who are currently contemplating the addition of a licensed professional to help plan an effective long term financial strategy. Like everything else, there are several aspects to consider when choosing a candidate to perform such an important task and please read on to find some of the critically important elements I typically research prior to making a decision of this magnitude.

<> Consultant - Advisor - Planner

The place where you do business can often times be a good indicator of the level of financial service provided by the staff. If you use a bank like most people, you're likely to find the entire spectrum of licensed personnel, from the Series 6 "Consultant", all the way up to the "Advisor" or "Planner" ( C.F.P. Certified Financial Planner ) who possesses a more extensive license which may include the "General Securities Representative", more commonly known as the "Broker's". The distinction can be very important when considering and choosing a financial person to help you achieve your goals.

If you are only interested in purchasing mutual funds or annuity products, then a Series 6 licensed individual may be sufficient, however, if you prefer access to a wider range of complex financial vehicles including options or high beta individual stocks, a relationship with a Series 7 licensed individual may be the better choice. Essentially, a Series 6 license authorizes an individual to buy and sell Mutual Funds & Annuities both Fixed & Variable, a Series 7 license includes all the preceding and then some, including Options, Individual Stocks & Bonds, Partnerships both Limited & General etc. Essentially, a more complex investment strategy can be designed and implemented when you establish a working relationship with a Series 7 licensed individual.

  • To my knowledge per NASD Rules & Regulations, a person must obtain a Series 7 license to advertise as an "Advisor" or "Planner" however, a Series 6 is the only prerequisite to call yourself a "Consultant" -

<> Self Study or Sponsorship?

Did your Financial Advisor candidate study and obtain his/her license independently, or was he/she initially hired by an investment firm or bank that sponsored the NASD study course and test?. Although the license(s) are issued by the same regulating body, there can be a significant difference in the way a person prepared for both the test and actual job duties which are mainly sales related even though in theory, a person must learn a certain degree of law material along with personal finance products. If a person studies independently, his/her individual ethical and moral foundation will be the only building blocks from which to draw upon, and the ultimate style in which that person runs day to day operations will be influenced by one person and one person only. If your candidate was sponsored by a bank or investment firm, more than likely the training from beginning to end was influenced and dictated by the company's expressed and implied standards and principles which can at times contrast with the employee or trainee.

I always inquire about this when talking to a candidate, the answer may provide additional insight.

<> Experience Level

Don't hesitate to ask a Financial Advisor or Consultant how long he or she has been employed in the financial field, it will give you a good perspective on his/her level of real world experience and hands on knowledge of the vast array of products on the market. Per NASD guidelines, a licensed person cannot embellish or enhance his/her work history or record in an unethical attempt to present his or herself as a more experienced or credible candidate. If asked, a licensed person must give an accurate, good faith answer and historical account with regard to tenure or years active as a licensed representative. In addition, it's perfectly acceptable within the industry to ask for references. two former or current clients you can contact to briefly inquire about the general business relationship should be sufficient to provide adequate information.

<> SEC - NASD Web Site

As briefly mentioned at the beginning of this article, one of the best places to start your research is a visit to the NASD ( National Association of Securities Dealers ) web site. Once you have obtained the potential candidates name and employer, it's a relatively easy task from there to find out relevant and important information about his/her current and past history as a licensed professional. The site is somewhat user friendly although some improvements would provide a better experience. Once you arrive at the NASD domain, the home page will prompt you to enter pertinent data related to your specific inquiry. Look to the left hand side for a menu and additional options to get started with your search.

The information that can be obtained from this invaluable site should give you an adequate business history profile which should help you with your hiring decision.

  • The following is just a partial list of inquiries that will be answered by simply visiting NASD online.

10 Year Employment History -
Past issues which were addressed and or pending if any -
How long a person has been registered with the NASD -
Current issues pending if any -

  • The tips contained within this educational module are just the "Tip" of the iceberg so to speak to assist you during the research phase of choosing a Financial Advisor / Planner. Only your due diligence and intuition can ultimately help you decide who is the best and most qualified candidate for this very important job. Within the context of this article, I've included a very small portion of data which is readily available for anyone who wishes to conduct online research pertaining to a current, or previously licensed representative and candidate for hire -

- I hope you've found this information helpful - Explore additional personal finance entries below -

NOTE to Visitors - The "Links" listed below within the "Discover More Hubs" segment are randomly selected and placed by HubPages, not the author of this specific entry - Alternative Prime does not necessarily recommend or endorse the articles nor guarantee quality of the content contained therein -


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      Rosedala 8 months ago

      THANK YOU SO MUCH for your most thorough and helpful article!!! I'm only looking for a consultation about a dilemma at this time and am afraid to get either an ill intentioned shrewd financial manipulator or a well intentioned advisor who's not experienced. :)

      Your article I'm sure will help me find someone worthwhile. :) Thanks again.