What are the red flags when selecting a financial adviser? How can you make sure the person isn’t just a glorified salesman? Last week, the Suze Orman Show featured this very subject.

The Red Flags:

  • The adviser cold-calls or contacts you first
  • They make house calls
  • They don’t ask questions about your martial status, income, career, etc.
  • They first ask how much money you have to invest
  • They aren’t a Certified Financial Planner (CFP) professional
  • They don’t tell you how they are paid
  • They are paid on a commission basis
  • They want you to write a check to their personal name
  • Your current adviser hasn’t called you in 12 months

Criteria to Check

  • Is their office space clean and orderly?
  • Do they ask you about your health, if you have debt, if you care for your parents, do you have a will or trust, do you need to make a major purchase soon, do you have a retirement plan, and do you have insurance?
  • Are they CFP certified? Meaning they went through a 2-year certification process and are engaged in continuing education requirements.
  • They tell you upfront how and when they are paid.
  • Method of payment is fee only.
  • Payment/checks are made out to a financial institution.
  • They call you during good and bad markets.
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