How to avoid underqualified financial advisors

Selecting an inexperienced, or even fraudulent, advisor could put your financial future at risk.

11:11 30 March 2014

Many of us do not know how to determine if a financial advisor is qualified to help us with the tasks we need, so we rely on recommendations from friends and family. Occasionally those recommendations may be useless. When friends or family are not well-versed in the world of finances and investments, they may not be an accurate judge of a person’s capability. It is important to verify the credibility and qualifications of any financial advisor that you may do business with in the future. Here are a few ways to make sure that the person managing your funds is properly qualified.

• Research—even if you receive referrals, do some research online. You should be able to find a financial advisor’s credentials and experience just by searching a few websites. Just check that the websites you use for research are legitimate websites, and try to confirm the information by checking more websites.

 

• Important question—if you want to know the level of credibility a financial advisor has, you should ask if he or she can provide services under the “duty of care of a fiduciary”.  If a financial advisor is unable to offer those services, you may be dealing with an under qualified advisor, or even a fraudulent one.

 

• Free assistance—there are organisations that are able to provide recommendations, or inform you of properly certified financial advisors. Much of the time, this information is free of charge depending upon the organisation.

 

• References—if you still are unsure which financial advisor to select, try to find out if there are multiple recommendations for the same advisor. This may be a decent indicator of a popular financial advisor.

It can be difficult to ensure that you have a properly qualified financial advisor, but even after you have done research and chosen one, watch statements closely.