Trust but Verify with Your Financial Adviser
You have to know who you're working with, and how your money is being invested. Here's how to tell.

Trust is the coin of the realm in the field of financial advice. You should always feel comfortable with your financial adviser, confident that the adviser would never deceive you. But that means you need to do some homework, too.
Here are a few guidelines to make sure you are being diligent when it comes to keeping your investments secure.
1. Verify that there are no complaints against your adviser.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Use the tools provided on the federal government's websites, www.sec.gov and www.finra.org, and enter your adviser's name. This will pull up your advisor's affiliations and any history that is noteworthy for an investor to know.
2. There is no special college degree to become a financial pro. In many cases, it is a simple test that an adviser passes to sell you investments, as a broker. Financial advisers and brokers can then become high pressure sales people. The key is to understand the difference between an adviser and a broker.
Investment advisers are held to a fiduciary standard and can be regulated by the Securities and Exchange Commission (SEC, a federal agency) or state securities regulators. The standard requires the adviser to place his or her own interest below the client's best interest.
On the contrary, brokers only need to fill a suitability obligation to their clients. The main difference is the broker's duty is to the broker-dealer he or she works for unlike the adviser whose responsibility is to the client.
Another area to be aware of is the education that the adviser has received. The most common designation that takes extensive time and has a 10-hour, two-day exam is the Certified Financial Planner (CFP) designation. Be sure to check out your adviser's background on www.cfp.net.
3. Advisers are conduits to your investments and should be holding your investments with reputable companies. Many advisers create their own statements to supplement the brokerage statements (i.e. from Fidelity, Merrill Lynch, etc.), and these statements are usually very helpful. Be sure that you verify that your investments are held at a reputable firm by calling the customer service number and taking receipt of monthly statements from the brokerage firm.
4. If you are seeking out a financial pro, make sure you understand the fees you will be charged. Some advisers will try to sell you a load mutual fund. Loads most commonly come in one of three forms. The first is a front-end load. This is an A-share that can charge up to 5.75% up front at the point of purchase. B-shares can charge 1% annually for 5 to 7 years, and C-shares might charge 1% annually. Each of these share classes might also have management fees that the mutual fund companies charge.
Another form of compensation is a flat fee or a percentage of assets. Make sure you know what you are paying and whether it is a fair price. Shop around and compare.
5. One of the most scrutinized investment products are annuities. Annuities very rarely or never state how much the commission is for the seller of the product. The best way to assess an annuity would be to compare it to other annuities. You should also make sure the annuity company is reputable and receives high marks from third-party ratings services. I like to use the COMDEX, which is a compilation of all four major ratings service (Standard & Poors, Moody's, A.M. Best and Fitch) and gives the annuity companies a score between 1 and 100.
Make sure the timeframe is appropriate for your situation, too. And if you are in a long annuity be sure to understand how much you can access per year (it's usually 5% to 10%. Finally, many times the rate that is stated is only guaranteed for the first year, so be sure to confirm the rate for all years you own the contract.
6. Your 401(k) plan is often the place where most of your wealth is accumulated. Be diligent with the choices you make within this retirement savings vehicle. You should diversify your current balances and future contributions. Also, annually check the fees you are paying for each investment you hold in your 401(k). Consider annually increasing your contributions, if you can. And if you think your investment choices are poor, be sure to tell your human resource representative you are concerned.
7. Keeping money in the bank is not always the safest place. In most cases, money in the bank is insured by the Federal Deposit Insurance Corporation, and you will not lose your principal. However, with current interest rates at banks averaging less than 0.10% and inflation averaging around 2.5%, you are losing money by keeping money in the bank.
Consider this: The cost of goods increases each year, and if the money you are going to use for future purchases is not increasing, you are losing future purchasing power. Let's use the following example. If during retirement you plan on purchasing a new car for $30,000, and inflation is 2.5%, the cost of that car in 20 years is $49,158. If you had that $30,000 today, and it earned 1% for 20 years, you would have $36,606. That is a difference of $12,552. You need to put your money to work.
These are just a few guidelines to follow when investing. Most advisers do a great job but every now and then, there are those advisers and investments that are unsuitable or fraudulent. Remember the old axiom: If it sounds too good to be true, it probably is.
Auclair is an independent registered investment adviser in East Greenwich, Rhode Island. He combines his financial-knowledge base with a unique ability to match clients' emotions and goals to their balance sheets. He grew up with two teachers as parents and believes that clients need to understand to succeed.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Rob is a member of the Rhode Island and national chapters of the Financial Planning Association and the Rhode Island Estate Planning Council. Rob received the 5 Star Wealth Manager award in 2014. Rob was a regular guest for the past four years as the Financial Planning Pro on FOX Providence's The Money Pros. He continues to provide advice on 630 WPRO and ABC6 in Providence.
-
The Best Aerospace and Defense ETFs to Buy
The best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Walmart Takes on Prime Day With Competing July Deals Event
Walmart is launching its own multi-day sales event to rival Amazon Prime Day — and it could be a smart time to shop, even if you're not a member.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet Spot
Converting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)
If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on Vacation
Here are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Investing Professionals Agree: Discipline Beats Drama Right Now
Big portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This Instead
Yes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
-
Social Security's First Beneficiary Lived to Be 100: Will You?
Ida May Fuller, Social Security's first beneficiary, retired in 1939 and died in 1975. Today, we should all be planning for a retirement that's as long as Ida's.
-
An Investment Strategist Demystifies Direct Indexing: Is It for You?
You've heard of mutual funds and ETFs, but direct indexing may be a new concept ... one that could offer greater flexibility and possible tax savings.
-
Q2 2025 Post-Mortem: Rebound, Risks and Generational Shifts
As the third quarter gets underway, here are some takeaways from the market's second-quarter performance to consider as you make investment decisions.