Selecting A Financial Professional
Posted on October 2, 2012 by bob in Financial
Whether you’re a seasoned investor or a novice, you could benefit by working with a professional financial planner or investment adviser whose specialties fit your particular situation.
However, selecting the right professional knowledgeable about the specific issues affecting you, who is affordable, trustworthy and who can successfully counsel you on building a secure financial future, demands you do your homework before handing over your hard-earned money. 
Before committing to a working relationship with any financial professional, contact the Alabama Securities Commission (ASC) to determine the individual’s professional credentials, areas of specialization, education, previous investment experience, enforcement history and, especially, to verify that they are licensed and registered with the ASC to conduct securities business in Alabama.
Only want to buy or sell stocks? A Registered Representative may be the way to go. Representatives work for financial firms, called broker-dealers, and must pass basic broker exams and meet minimum standards of personal conduct to be able to sell stocks, bonds, mutual funds and other investments to the general public, offered by the firms they work for.
Do your financial needs require more planning and oversight? A Certified Financial Planner (CFP) may be the answer. CFPs must pass more rigorous training covering principles of finance, insurance, investments, taxes, and estate and retirement planning and must also meet exacting education, ethics and experience requirements in order to gain certification. Many CFPs specialize in serving a particular group of clients, such as retirees, small business owners and military personnel. CFPs may also be CPAs, Registered Investment Advisers and Registered Representatives.
A Registered Investment Adviser (RIA) actually manages or invests money on behalf of their clients and, depending on the amount of assets they have under management, must be registered either with the ASC or with the U.S. Securities and Exchange Commission.
Those authorities enforce RIA rules concerning disclosures, ethics, privacy, trading and record-keeping. These professionals act with the investor’s consent to decide how their investments are managed and to trade without the investor’s prior authorization. RIAs may charge based on assets under management, set fee schedules or some combination. There are also fee-only investment advisers who only give advice and charge only for their time.
Similar to CFPs are Chartered Financial Consultants (ChFC). These financial professionals typically have more extensive training in insurance and estate planning issues and may also be CFPs or Registered Representatives.
Certifies Public Accountants (CPA) are generally known for providing tax services to business owners and individual clients with more complicated financial circumstances and may also offer personal financial planning services. A number of CPAs also may hold an Investment Adviser Representative license from the ASC or the SEC.
Historically, the vast majority of those prosecuted for white-collar financial crimes in Alabama are not registered with the ASC or the SEC as required by state and federal law. Once you have decided what kind of financial service you will need to help protect and grow your nest egg, your first step should be to check with the ASC before agreeing to let anyone, whether state or federally-registered, handle your money!
ASC will provide a free background check on anyone offering an investment opportunity or investment advice. Call 1-800-222-1253 or visit the ASC online at www.asc.alabama.gov to learn more.
Joseph Borg, Exec. Dir., ASC
This article is provided by a generous grant from the Investor Protection Trust: www.investorprotection.org.
