If you're searching for a financial advisor, here are some red flags to be aware of as you shop around:
An advisor who doesn't listen
Before you hire a financial pro, you should know precisely what questions you want answered -- and what you're paying for -- before you write that first check. (We play Fool Shrink and help you unearth your needs in "When To Get Advice.") It should be a two-way effort, with both of you probing for a good fit. In particular, when you ask questions, do you understand the answers? When you ask for clarification, does the subsequent explanation make more sense? Are you comfortable admitting that you don't understand something? Be wary of somebody who either desperately wants your business or can't "lower themselves" to your level. Oh, and if a life insurance salesperson seeks out your business offering a free consultation: No, thank you. Trust us on that one.
"Please sign here. I'll explain later."
It goes without saying, but we like to repeat ourselves: Don't sign anything that you don't understand. Don't write out checks directly to the planner for financial products and investments. Most importantly, don't sign a "discretionary authority" unless you know exactly what you are doing. This enables a planner to buy and sell investments without consulting you ahead of time.
Pros masquerading as pros
It pays to check up on professional credentials and can save you a few calls to the Better Business Bureau before it's too late. Don't rely on the simple title "financial planner." Even the shadiest of characters is free to use it. However, to use the title Certified Financial Planner (CFP), for example, a candidate must pass a two-day exam, agree to abide by certain ethical standards and financial-planning practices, and -- to maintain the license -- obtain 30 or more continuing education units (two of which must be on the topic of professional ethics) every two years.
CFP is not the only financial planning credential, though. To learn more about other credentials and how to check up on pros, read about the rest of our five flags.
Learn much more about finding a good advisor in our Advisor Center.
Remember that no matter where you seek financial advice, be it with your hometown financial planner or with our TMF Money Advisor service, remember that it is your money -- and you are an at-will customer. In the end, you call all of the shots. If you encounter a third party who insists that you relinquish all the thinking to them, then we humbly suggest that this may not be the best pro for you.