Penny Wise and Pound Foolish
Before You Hire an Adviser
Investigate - with businesslike rigor and savvy - stockbrokers, financial planners, insurance salespeople and any other so-called financial experts. Here are some tips from Shirley Rooker, president of Call for Action, a not-for-profitconsumer help line based in Bethesda, Md., who suggests that no financial adviser (or adviser's recommendation) should be accepted at face value.
1. Take the initiative. Rather than waiting for all those experts you don't know to call you, draw up your own shortlist of potential advisers - when and only when you've identified a need. The best way to get names for your list is by networking with friends, corporate advisers and fellow business owners.
2. Examine track records closely. "If someone gives you an expert's name, make sure you know exactly how he or she has performed. You'd be surprised how many times people will recommend someone just because he or she has a nice personality, without any firsthand knowledge of qualifications," Rooker says.
3. Keep your short list local. While that's no guarantee of success, you're better off if you're able to eyeball your adviser - and his or her place of business.
4. Interview several candidates. Among the questions to ask: What are your skills? How were you trained and certified? How long have you been in business? Have you ever been censured, fined or otherwise disciplined by a regulatory agency? Also ask for client referrals. Then check out the accuracy of every fact the adviser has given you.
5. Check for complaints. But remember that a no-complaint record with groups such as the Better Business Bureau is no guarantee of future success or even proof, in itself, that the adviser works for a legitimate business. "The company may have just started up or may have changed names in order to escape its past," Rooker notes. That's why you need to take all the other precautions, too."
This story was adapted from "First, Kill All the Brokers," an article in the October 1997 issue of Inc. magazine.