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Choosing a Financial Professional

Welcome to Your Money.  On today’s podcast, we’ll discuss how to pick a financial professional. 

Are you the type of person who will read as much as possible about potential investments and ask questions about them? If so, maybe you don’t need investment advice.  But if you’re busy with your job, your children, or other responsibilities, or feel you don’t know enough about investing on your own, then you may need professional investment assistance. 

Some financial professionals offer a complete financial plan, assessing every aspect of your financial life and developing a detailed strategy for meeting your financial goals. Other financial professionals may make recommendations about specific investments like stocks, bonds, mutual funds, or 529 plans. 

You can get investment advice from most financial institutions that sell investments, including brokerage firms, banks, mutual funds, and insurance companies. You also can hire a broker, an investment adviser, an accountant, a financial planner, or other professional to help you make investment decisions.

Will you have to pay for this assistance?  Certainly.  But we can’t be so confident about how you will pay for this help.  Some financial professionals may charge you a fee for a financial plan, for example.  Others receive a fee based on a percentage of the assets that they manage for you.  And many receive commissions based on the financial products you buy.  And still others a combination of these methods.  No matter how a financial professional is paid, however, it pays to comparison shop.  And whether you’re looking for a financial pro or landscaping pro, it is always a good idea to find out exactly what services you are getting and how much they will cost.   

Of course, you’ll want to investigate thoroughly before doing business with a financial professional or firm that has a history of complaints or problems with regulators.  

And checking out an investment professional’s background is easier than you might think – there are free resources on the Internet that can help you.  In fact, determining whether the financial professional you are considering or currently using is a broker or investment adviser may be the most difficult step in the process. 

SEC Commissioner Cynthia Glassman says, “Broker-dealers and investment advisers, including financial planners, generally perform different functions, and operate under different regulatory regimes. However, their activities sometimes overlap, causing competitive issues and investor confusion.” 

If you’re not sure.  Just ask.  It’s simple.  Are you a broker?  Are you an investment adviser? 

You can verify a broker's disciplinary history by checking the Central Registration Depository (CRD). Either your state securities regulator or NASD can provide you with CRD information. Your state securities regulator may give you more information than NASD, especially when it comes to investor complaints, so you may want to check with them first. You'll find contact information for your state securities regulator on the website of the North American Securities Administrators Association. To contact NASD, visit NASD's BrokerCheck website, or call them toll-free at (800) 289-9999.

You can find out about investment advisers and whether they are properly registered by reading their registration forms, called the "Form ADV."  You can view an adviser's most recent Form ADV online by visiting the Investment Adviser Public Disclosure (IAPD) website.  At present, this database contains Forms ADV only for investment adviser firms that register electronically using the Investment Adviser Registration Depository.  You also can get copies of Form ADV for individual advisers and firms from the investment adviser, your state securities regulator, or the SEC, depending on the size of the adviser.

If you’re not taking notes, don’t worry.  You can review a transcript of this podcast on the SEC’s “Your Money” podcast page.  There’s a link to the SEC’s “Your Money” page on the “Investor Information” section of the SEC’s website.  Or simply plug in “SEC’s Your Money Podcast” into your favorite search engine. 

Thanks for joining us.  Your Money is brought to by the U.S. Securities and Exchange Commission.  Write us at podcast@sec.gov  


We have provided this information as a service to investors.  It is neither 
a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular 
law or rule, please consult with an attorney who specializes in securities law.

Modified: 07/03/2006