Choosing,Selecting, and Finding a Registered Financial Advisor/Planner

I work every day as a back office worker for an investment firm, so I see the good and the bad about financial advisors, wholesalers, and the markets. If you've come looking for a hot tip on an investment, then this might not be the place for you.

I decided to make this blog so that every day people can have access to useful, free, and insightful information/investment analysis about the financial industry from behind the scenes.

My goal is to help you understand what it is you're doing before you answer that random financial advisor's call to come into his office. Being educated about your options is the best way to have success in the long-term with your financial advisor.

Don't just assume that because they have rules and regulations that they are just giving you the best investment tips/financial advice out there! It just doesn't work that way.

The best way to understand your financial advisor is to know their background, and then know how he gets paid! This isn't to say that most of them don't have good intentions. But the only person's intentions you should trust with your money are your own!

Before you go into your financial advisor's office you should learn a little bit about what you're getting in to. Because products (and this topic) can be so broad there is no chance that I could ever cover all of the situations for every mutual fund.

Although this hub will not cover the topic of fee-based or fee-only financial planners and advisors, it's important to know what it means to be an independent financial advisor.  Independent just means that they don't sell strictly for one company.  Independent advisors can sell products from many companies across the board and are only limited by products that advisors that represent firms are given privilege to sell.

Here's a common misnomer about financial advisers... Because they are in the financial industry they must have had a college education. NOT TRUE. Many financial advisers are salesman that have come directly from High School, skipped out on their college education and started their sales process.

I know what you are thinking... "hey so and so I know didn't go to college and is one of the smartest people that I know!

While, this may be true, and so and so might be the smartest person you know, many financial advisors slip through the cracks of the system merely passing a few licenses in order to sell you the products that we've all heard about! Some of these products are more complicated then even they understand!

I'm not saying that your financial advisor has to be college educated, (in fact designations may prove to be more useful), but it is important to know where they have been and where they are going!

Here's a few of the designations/licenses your financial advisor may have:

Insurance

Life and Health license: Required to sell all basic life insurance, Health insurance, Fixed annuities etc... Advisors who have this without any series licenses may not sell Variable Life insurance or solicit/negotiate/effectuate a securities transaction.

Property and Casualty license: Property/casualty insurance is insurance on homes, cars, and businesses.

Securities designations

Before you look at this extended list I'm going to let you know it's probably way more information than you need to know, but if your adviser mentions that he/she has a certain designation or series completed then you'll know what it is. Most basic advisers have a series 6,63 (mutual funds, variable annuities, variable life insurance) or a 7,66 (stockbroker and can do everything the 6,63 does). Obviously the more series that your adviser has completed the more education they have had.

Other important designations that your financial advisor may have (If your advisor has one of these they are they real deal. Just remember that that doesn't mean they always have your best interest at heart. More about that to come.).


Certified Financial Planner (CFP) - financial planners conferred by the Certified Financial Planner Board Chartered Life Underwriter (CLU) - advanced life insurance and financial planning

Chartered Financial Consultant (ChFC) - a comprehensive range of financial planning topics
Chartered Financial Analyst (CFA) -(per wikipedia) international professional designation offered by the CFA Institute (formerly known as AIMR) to financial analysts who complete a series of three examinations. In order to become a CFA Charterholder candidates must pass all three six-hour exams, possess a bachelor's degree (or equivalent, as assessed by the CFA institute) and [1] have 48 months of work experience in an investment decision-making position. CFA charterholders are also obligated to adhere to a strict Code of Ethics and Standards governing their professional conduct.[2]

Because of all the rules and regulations associated with talking about investments I thought I would use this list that came from

This is a list of FINRA, NASAA, and NFA financial securities examinations.

Registered Representative Level:

Series 3 - National Commodity Futures Exam
Series 5 - Interest Rate Options Exam
Series 6 - Investment Company and Variable Contracts Exam (Mutual Funds/Variable Annuities)
Series 7 - General Securities Representative Exam (Stockbroker)
Series 11 - Assistant Representative - Order Processing
Series 15 - Foreign Currency Options Exam
Series 17 - Limited Representative (FSA registration)
Series 22 - Direct Participation (Limited partnerships) Exam
Series 30 - Futures - Branch Office Manager Exam
Series 31 - Futures - Managed Funds Exam
Series 32 - Futures Exam - United Kingdom Representatives
Series 37 - Canadian Module of the General Securities Exam
Series 38 - Canadian Module of the General Securities Exam
Series 42 - Registered Options Representative Exam
Series 44 - NYSE Arca Options Market Maker Exam
Series 47 - Japanese Module of the General Securities Exam
Series 52 - Municipal Securities Representative Exam
Series 55 - Equity Trader - Limited Representative Exam
Series 62 - Corporate Securities - Limited Representative Exam
Series 63 - Uniform Securities Agent State Law Exam
Series 65 - Uniform Registered Investment Adviser Law Exam (RIA)
Series 66 - Uniform Investment Adviser - Combined State Laws Exam (Combined 63 and 65)
Series 72 - Government Securities - Limited Representative
Series 79 - Investment Banking Exam
Series 82 - Private Securities Offerings - Limited Representative
Series 86 - Research Analyst - Securities Analysis
Series 87 - Research Analyst - Regulations

Registered Principal Level:

Series 4 - Registered Options Principal Exam
Series 9 - NYSE General Securities Sales Supervisor Exam - Options
Series 10 - NYSE General Securities Sales Supervisor Exam - General Module
Series 12 - NYSE Branch Manager
Series 14 - NYSE Compliance Officer
Series 16 - NYSE Supervisory Analyst
Series 23 - General Securities Principal (Upgrade from Series 9 and 10)
Series 24 - General Securities Principal Exam
Series 26 - Investment Company (Mutual Funds) Principal Exam
Series 27 - Financial and Operations Principal Exam
Series 28 - Financial and Operations Principal Introducing Broker Exam
Series 39 - Direct Participation Programs Principal Exam
Series 51 - Municipal Fund Securities Limited Principal
Series 53 - Municipal Securities Principal Exam

Final Thoughts -

More important than any of these designations is for you to understand exactly what you are getting yourself into! Know the fees and risks associated with any investment a financial advisor is trying to sell you. Another tip is to ask your financial advisor if they have a similar investment and what the balance is. Each financial advisor must keep a record of all of their personal investments in their office. It's perfectly appropriate to ask how they allocate their own portfolio!

Remember, making an educated decision about who you choose for your financial advisor could be even more important than the decisions they make!

One common mistake is that when someone goes to see a financial adviser they follow blindly. If your Doctor told you that you broke your back, but your back felt fine you'd get a second opinion wouldn't you?

All across the US, financial advisers are telling their client's exactly that, that their investments are broken and that they are the ones to fix them! Sometimes this is the case. Many times it's not!

Remember that with nearly all investments come fees for getting in and fees for getting out. Making sure that you get what you want the first time is essential in not making big mistakes!

We've all heard the basic financial advice to ask a friend about a financial adviser to recommend to you. Hogwash. Why is your friend qualified to recommend a financial adviser? Or if the financial adviser is already your friend, is that what you really want? Just because your buddy is a gynecologist doesn't mean you want him to be your wife's gynecologist right? What I am saying is it can get a little awkward, and this is business.

In Summary:

1. Get Educated
2. Go to more than one financial advisor for your investment advice. Remember this is your future retirement, it goes beyond friendship.
3. Ask he/she how they get paid!
4. See how their strategies differ.
5. Pick the best one or do it yourself (You still have that option!)

Here's are two additional "money" hubs I have written that you might be interested in taking a look at.

Mutual Fund Share Classes and Fees

Discretionary Income - A Penny Saved is Worth Far More than a Penny Earned

I hope you've enjoyed this hub on finding a registered representative/financial advisor. If you have, then please vote it up at the bottom and leave a comment. Hopefully I have helped you make one of the most important money decisions you'll ever make!