Finding a financial adviser is risky business

You can find a financial adviser on your own in one of three common ways. Each has its own benefits and risks.

Referrals (Friends and Family)

You ask people you know for the names of the financial advisers they use. You hope that what went well for them in the past will go well for you in the future. If only things were that easy.

People you know might recommend advisers because the stock market went up 30% last year and they had a good time. You choose the adviser based on what your friends and family have told you about their experiences in a bull market. You choose the adviser at the start of a bear market, which is bad. After a year, 25% of the value of your assets has gone down.

Referrals (Professionals)

When you ask your CPA for a referral, you use the same kind of reasoning. You think he knows who the good, honest advisors are in your area. So, you’ll be less likely to choose a really bad adviser.

What you don’t know is that the CPA and the adviser both refer clients to each other. This is how they make their businesses grow. You can’t have this information, of course. If not, you might think that the CPA and the adviser might have competing interests.

Don’t think that relationships that work both ways are rare. They are the usual case.


The Internet is special in a way that can help you if you use it right. You can find advisors on the Internet and find out more about them while keeping your identity secret. You can find an advisor on the Internet. Or, you can type “financial adviser city state” into Google and do your own research.

Visit the adviser’s website to find out more about his qualifications and services. When you use the Yellow Pages, you can’t do this. You can figure out who you want to talk to by doing a little bit of research.

You can also do a name search on Google. We suggest that you use the search function to find out more about the adviser’s firm. Look for articles that the adviser has written. Look for articles, quotes, and mentions written by other people.

Before the first meeting, you should know a lot about the adviser.

The article was first published at Paladin Registry.

Who Wrote This: For 28 years, Jack Waymire worked in the business of financial services. He ran a registered investment advisory firm with more than 50,000 clients as president and chief investment officer for 21 years. He left the business when John Wiley published his book, Who’s Watching Your Money?, in 2003. In the same year, he made a website for investors called PaladinRegistry. It was based on the ideas in his book. Jack writes a column for Worth magazine and blogs often on major financial sites. He is often quoted in the media, including the Wall Street Journal, Forbes, BusinessWeek, Bloomberg, and Kiplinger.

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