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Have You Read the Fine Print?

Wells Fargo, Raymond James, Oppenheimer, RBC, and 75 other firms have just been ordered by the Security and Exchange Commission (SEC) to pay millions of dollars to harmed investors for unfair practices in selling mutual funds. Unfortunately, this happens far too often. If you are working with or evaluating a financial adviser, you can protect yourself by making sure you can answer the following 5 key questions. Of course every investment professional will put their best foot forward on their website or in a face to face meeting. But, if you want the truth behind all the sales and marketing jargon, you need to look at the “fine print.” These key pieces of information can be found right from your own computer.

1. Are they a fiduciary adviser or a broker?

When choosing an adviser, one of the most important things you need to know is will this person always put your interests first. This is known as a fiduciary standard and unfortunately not all investment professionals are held to this standard, in fact only a small percentage are. So how can you tell which type of investment professional you are speaking to? One of the easiest ways is to look them up on BrokerCheck ( a service provided by the Financial Industry Regulatory Authority (FINRA).   

When you enter the professional’s name and firm, you will see how this person is registered, either as a Broker, an Investment Adviser, or both. Only Investment Advisers are considered fiduciaries and required by law to always act in a client’s best interest. Note that if a person is registered as both broker and adviser, they will be held to different standards of care depending on the types of services and transactions they are providing. When they are selling a financial product, they are acting in the capacity of broker and are held to a lesser standard of care. It is difficult for a client to know when the professional has “changed hats” and is no longer considered an adviser under the law. To ensure your professional is always held to the fiduciary standard, choose one that is only registered as an Investment Adviser.

2. Are there any disclosures or disciplinary actions?

If there have been any client complaints or disciplinary actions taken against the adviser, these will be disclosed on BrokerCheck (for brokers) or on the Securities and Exchange Commission’s public disclosure site (for Investment Advisers) ( On the SEC site, enter the adviser’s name and firm and click on Get Details. Run the Detailed Report to learn more.

3. How qualified are they to give advice?

The Detailed Report will allow you to see if the adviser has earned any professional designations. The key ones to look for are Certified Financial Planner (CFP), Certified Public Accountant (CPA), Personal Financial Specialist (PFS), Chartered Financial Analyst (CFA) and Chartered Financial Consultant (ChFC). Most qualified advisers will have earned at least one of these professional designations. You can learn more about each of the designations by going to

The Detailed Report also shows you how long the adviser has been in the business and their employment history for the previous ten years. 

4. What types of services do they provide?

It’s important to know what you are looking for in an adviser and what you want to accomplish. Are you looking for help with saving for college, planning for retirement, getting tax advice, or do you just want help investing your assets? Some Investment Advisers offer only investment management services, while others provide a full range of financial, tax, and estate planning services as well. 

All of this information is disclosed on the firm’s Form ADV, which is the SEC required disclosure document and can be accessed through the SEC site ( In the search bar, click on Firm and enter the firm’s name. Click Get Details and then click Part 2 Brochure. Under the Table of Contents you will see all the information contained in the document. Look for the section on services to get a full description of the types of services offered. 

5. How are they paid?

The Part 2 Brochure also gives detailed information about the firm’s fees and compensation. Many firms charge a percentage of the assets under management. They may also charge flat or hourly fees. Any other types of compensation, as well as any conflicts of interest arising from such compensation, will also be spelled out. Ideally, the fees and compensation will be straightforward and easy to understand so that you know exactly what you are paying and what you are getting in return.

There is a lot of really important, easily accessible information out there about advisers and brokers, but most people don’t know what to look for or where to find it. Follow these steps and you will be able to make a very informed decision. Or attend our upcoming Wine Down Wednesday to learn more.