How to Investigate a Financial Advisor

Turning to a financial advisor when you need help managing your money is a smart move, but only if you choose someone who's capable of performing the tasks that you've assigned to them. So, how do you know that you're choosing the right person for the job? You investigate the advisor's credentials and performance record before making the leap.

Verify professional credentials. The term "financial advisor" or "financial planner" doesn't mean much unless it's backed by credentials, so start by asking your prospective advisor what qualifies him for the job. Is he a certified financial planner (CFP)? A Certified Public Accountant-Personal Financial Specialist (CPA-PFS)? A Chartered Financial Consultant (ChFC)? If so--and you want him to be one of these--verify his certificates or designations with the Certified Financial Planner Board of Standards (see Resources below).

Check for past disciplinary actions. Ask the advisor to give you a list of all of the organizations that she is regulated by. Then check with these groups to see if they have any past disciplinary actions on file for the individual. The FINRA, CFP Board and your state insurance and securities offices should all maintain disciplinary records.

Request form ADV. All registered investment advisors must be able to provide a copy of form ADV upon request. This form lists the advisor's credentials, educational background as well as his business and disciplinary history for the past 10 years. It also includes information about the advisor's fees, services and investment strategies.

Check references. Ask the advisor to supply three references. Then make contact with all three. Be sure to ask not only what they like about working with the advisor, but also what they dislike. They probably won't expect this question, so you should get some fairly candid answers.

Trust your gut. If your investigation doesn't turn up anything bad, but you still don't have a good feeling about the advisor, go elsewhere. It's your money, and you get to choose who manages it.


  • Interview several financial advisors to ensure that you're choosing the best one for your needs. Ask friends and family to recommend advisers whom they use and trust


  • If your investigation turns up anything bad or questionable about the individual, look for another advisor.