What Do Home Inspections Have to Do With Hiring a Financial Adviser?

Conrad Toner |

Years ago, formal home inspections were a rarity.  Sure, uncle Buck or your friend Bill the builder may have dropped by to check it out, but that was about it.  Today, almost nobody buys a home without a home inspection. Why the radical shift to home inspections?

It’s simple really.  If you’re going to spend $150,000, $300,000 or $1,000,000 on a property, you want to ensure that it’s worth it.  You want to make sure the foundation’s solid, there are no leaks in the roof, the furnace is up to par, and the plumbing and wiring all work and are up to code.  After all, this is a huge investment, right?  It’s an investment!

What the heck does a home inspection have to do with hiring a financial adviser?  Everything!

Let me ask you a question.  Why would you spend money to inspect an investment in a home and not spend money to inspect the person handling your other investments?  In my opinion, you must check out potential financial advisers before you buy into them and their services. It’s nothing personal, it’s just good business.  If you’re going to hand over $100,000 or $500,000 of your money, you want to know it will be safe.  You’re probably thinking that financial advisers aren’t like houses. There are no mechanical systems to check out, no foundation to survey, and no shingles to inspect.  Actually, they’re more similar than you might think.

You see, there are certain fundamental things every adviser must have present in his or her business that makes them not only legitimate but professional.   These things form the foundation of a professional financial advisory business. Every client who’s going to deal with a financial adviser should know about them up front before doing business.  Unfortunately, most folks have no idea about this stuff, and don’t know what to check out.

What should you check out about a potential Financial Adviser?

There are 13 basic things you should check before you deal with any financial adviser.  You can begin simply by obtaining the prospective adviser’s business card or visiting his website. Much of the information needed is publicly available and can be obtained with relative ease.  If victims of  the Earl Jones scam in Montreal had simply done the first 2 thing on this list, they could have avoided completely the financial ruin they now face.  In fact, many cases of theft and fraud involving so-called financial advisers were perpetrated by scammers who were not even licensed to sell investments anywhere.

13 Point Financial Adviser Checklist

1.    Is the person licensed to sell investments in your province or state?
2.    Does he have an investment dealer, and who is it?
3.    Is he in good standing with that firm?  Are there any disciplinary actions on file? Is he working under any “strict supervision orders”?
4.    What regulatory body is the firm governed by –MFDA, IIROC, SEC other?
5.    Is he and his firm in good standing with the regulatory body – that is, are there any disciplinary actions, cease-trade orders, suspensions, or bans on file against the adviser or the firm?
6.    If he’s not licensed to sell investments, is he licensed to sell insurance products including annuities and variable annuities in your province or state?
7.    Who is his insurance dealer/broker/managing general agency?
8.    What regulatory body, if any, is his insurance dealer governed by?
9.    Is he and his firm in good standing with that Insurance regulatory body – that is are there any disciplinary actions on file?
10.    Is the person a licensed Financial Planner?  Does he hold a CFP designation?
11.    Is he a member in good standing of the governing bodies for the designations he holds?
12.    Has he ever declared personal or corporate bankruptcy?
13.    Are there any media stories about this adviser – good or bad?

For more information on how to check out a financial adviser get the book Fearless Retirement.  There is also a companion website for the book with additional FREE resources at: www.fearlessretirementresources.com