Many Americans assume financial advisors have the same ethical obligations as lawyers or registered investment advisors to act in the best interests of the people they advise. This is not necessarily true. While lawyers and investment advisors are fiduciaries, plenty of financial professionals are not held to the highest legal standards when it comes to putting client interests first. What's more, not all financial advisors will be considered fiduciaries, even under an expanded definition of fiduciary created by new Department of Labor rules that go into effect in June of 2017.

Since the law provides less protection to people who seek the advice of financial advisors on a variety of money matters, it is up to you to do your due diligence and ensure your financial advisor is a trustworthy professional who will provide you with advice you should follow. This means, in part, knowing the red flags to look for -- like these five key signs that your financial advisor isn't someone whose advice you should be taking.

Businessman handing over money

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1. Missing credentials

Does your financial advisor have letters next to his or her name, like ChFC, CPA, CFA, CIC, CIMA, PFS, or CFP? These letters, respectively, stand for chartered financial consultant; certified public accountant; chartered financial analyst; chartered investment counselor; certified investment management analyst; personal financial specialist; and certified financial planner. These are all different certifications that professionals with money knowledge can obtain to prove their skills and abilities in a particular area of financial planning and investing.

You should ask financial advisors exactly what certifications they have, as well as finding out about their years of experience and their financial education. Unless advisors have acquired some type of professional certification -- which requires passing exams and proving abilities to an independent organization -- you have no way of knowing if they actually know their stuff. If they don't, it's your savings that will suffer.

In Australia, the failures of four big banks to check references of financial planners resulted in 1,347 customers losing a total of $30 million . A German paper, "Financial Advisors: A Case of Babysitters?, found accounts that used financial advisors had 5 points lower returns (net of fees) compared with accounts with no advisors. If you entrust the wrong advisor to manage $50,000 and earn a return of 3% instead of 8% annually, you'd be looking at $121,363 after 30 years instead of $503,133, a difference of $381,770 .  The prospect of losing hundreds-of-thousands is strong motivation to make sure an advisor has impeccable references and credentials. 

2. Poor listening skills

A financial advisor may be really smart, but that intelligence won't do you any good if that person is unwilling to listen to your needs and tailor a plan to meet your goals. Everyone's financial situation is different, and your investing strategy if you want to retire early and travel the world will be very different than the strategy implemented by someone who wants to work a long time and build a large nest egg to care for a disabled child.

You need your advisor to understand your income level, your risk tolerance, the demands on your income, and your goals for the future -- and you need your advisor to act in accordance with your wishes. Unfortunately, this doesn't always happen. In 2009, for example, five bank broker-dealers were fined $1.65 million for unsuitable sales of costly annuities to elderly investors. Many included death benefit riders the seniors were too old to be eligible for. This incident, of course, is just one of many examples where inappropriate investment products were sold to trusting buyers. The only difference is, this time the sellers got caught. 

While advisors should provide you with advice to help you set smart goals and invest the right way, they are not going to be able to help you succeed unless they're willing to take the time to find out exactly what your definition of "success" is and find investment products to match your goals.

3. Lack of transparency

Is your financial advisor willing to explain why a particular recommendation is being made? Do you know exactly how your advisor is earning money, and whether or not he or she is paid a commission on investments you make or an insurance policy you purchase? Advisors could have conflicts of interest and working and middle-class families collectively lose $17 billion annually due to conflicted advice . 

Financial advisors can and should be paid for their time and expertise, but paying too much in investment fees can cost you hundreds of thousands of dollars. Be sure to find an advisor who will tell you exactly what you're paying and who is willing to answer any questions you have.

An advisor who isn't transparent may also be involved in investment scams that could have an even more dire impact on your finances than high fees, so run -- don't walk -- from anyone who you think might be hiding something.

4. Aggressive sales pitches

Good financial advisors don't need to sell you on their services or sell you on investments. They explain what they can do -- without making unrealistic promises -- and show you why their services are a good fit for your needs. Advisors who are truly interested in helping you accomplish your goals also won't need to push you aggressively toward any particular investments, because they'll be able to explain the money moves you need to make to accomplish your objectives.

On the other hand, advisors can opt to enrich themselves at your expense by pushing investments that will make them a fortune -- like up front payments of up to 12% on equity-indexed annuities -- and investors chasing big commissions often make hard sells . 

If your investment advisor sounds like a used car salesperson trying to move a vehicle on the last day of the month, strongly consider walking away -- he or she either is not very good at the job, or stands to make big money from getting you to take the bait. Neither is a good thing.

5. Unrealistic Promises

Unrealistic promises often go hand-in-hand with an aggressive sales pitch. An advisor who promises to effortlessly make you a millionaire, who guarantees you'll outperform the market, or who otherwise makes promises that sound too good to be true is not an advisor you want helping you. More than 10.8 percent of adults -- 25.6 million people -- fell victim to fraud in 2011, and consumers lost $1.4 billion to fraud in 2012 . If your advisor is promising you the world, he may be another Bernie Madoff and you could become one of the millions who lose your hard-earned cash. 

Financial advisors must be willing to tell you the unvarnished truth -- even if that means letting you know you'll need to make some modifications to accomplish your goals. Look for someone who can provide you with the facts, not just a rosy picture of a financial future that won't necessarily turn into reality.

By making sure you're getting realistic advice -- without the sales pitch -- from a credentialed advisor, you can avoid being scammed or facing financial loss caused by someone who is supposed to be on your side. Just be sure to pay attention to any bad vibes or red flags, because the investments you're making in your future are too important to leave in the hands of someone you cannot trust. 

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