How Tell If Your Financial Advisor Is Legitimate

How to Tell if a Financial Advisor is Legitimate

We can all use a little help with our finances, particularly when we’re looking to create a comprehensive plan for the future. Whether you’re planning for retirement or simply looking to create security for the coming years, you’ll want to find a legitimate financial advisor.

Updated on Dec 12 2019


We can all use a little help with our finances, particularly when we’re looking to create a comprehensive plan for the future. Whether you’re planning for retirement or simply looking to create security for the coming years, you’ll want to find a legitimate financial advisor. A trustworthy financial advisor can make all the difference when it comes to managing your finances. They have the expertise to gauge your specific situation and give you valuable direction. But just like most other products or services, you shouldn’t just choose the first option available. You need to know that you’re choosing a legitimate financial advisor who can deliver the assistance you need.

There’s nothing worse than mistakenly hiring an advisor who’s looking to take you for a ride. And, it happens all too often. Fraudulent advisors take a client’s money with the promise of profitable investments only to pocket the cash and claim losses. To avoid this, you’ll need to work with a legitimate financial advisor. A true professional can help you secure your financial future with proper retirement planning. Plus, they can offer you relevant advice for saving and investing in the short term. This is why it’s important to make a good decision when hiring a financial advisor.

But, how do you know if you can trust your financial advisor? First, you’ll probably want to be sure that your financial advisor is also a fiduciary. As a fiduciary, your financial advisor is legally obligated to act in your best interest. However, simply holding fiduciary status doesn’t necessarily make someone your best choice. There are many other factors for you to be aware of. In addition, you should always check your financial advisor’s credentials.

Financial Advisor Credentials

As with many other professional fields, legitimate financial advisors can hold professional designations denoting their status. These are a good indicator that you’re working with a legitimate financial advisor. While there are many different credentials you can look for, you’ll probably want your financial advisor to be a Certified Financial Planner, or CFP.

Advisors with this designation can give you expert advice when it comes to retirement planning and budgeting. Plus, you’ll be able to move forward confidently. Acting with confidence makes the process of dealing with finances much simpler. This way, you won’t find yourself second-guessing your decisions as you’re leaving the office. But, certifications alone shouldn’t sign your trust over fully to an advisor. You should always do a bit more research. Particularly, you should know which organization your advisor reports to.

Organizational Oversight

A legitimate financial advisor will answer to the SEC or FINRA. In some cases, they may be reporting to both. The SEC, or Securities and Exchange Commission, is a government organization meant to protect investors and maintain fair market practices. FINRA, or the Financial Industry Regulatory Authority, is a private organization that regulates the financial industry.

A legitimate financial advisor overseen by FINRA will have necessary securities licenses, which you can ask for. If a legitimate financial advisor is overseen by the SEC, you’ll be able to look up their status on the SEC’s website. But, these are just some of the steps you should take to check financial advisor credentials. You’ll want to be as thorough as possible before handing off the savings you’ve worked so hard for. Taking the time to check with your advisor’s relevant organization will be worth the peace of mind that it will provide.

Do Your Research

There are very few professional services you’d hire without any form of review or recommendation. And, the same should be true for choosing a financial advisor. So, when you’re wondering “how do you know if you can trust your financial advisor?” try checking some online reviews. You can check the basic review sites that you would for most services, but it pays to dig a bit deeper. You can try searching for legitimate financial advisors that specialize in your specific situation. For example, you can look at financial advisors specifically for seniors. Or, you could look into the benefits of an advisor in your local area. Regardless of what you’re looking for, you should always do your due diligence before making a decision.

So, when choosing a legitimate financial advisor, always make sure that your bases are covered. Check to see if they are registered with the SEC or licensed by FINRA. Be sure that they are a fiduciary. Additionally, check their certifications to ensure that they’re qualified. You shouldn’t be afraid to ask questions. Simply speak to the advisor you’re considering to get a feel for them. You can ask questions to learn more about their process and see if they’re right for you. Once you’ve found a good fit, you can begin planning your financial future.

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