Don’t let others pick your financial adviser

Asking friends and family for referrals when you are looking for a financial adviser isn’t a bad way to begin your search. Just don’t assume your loved ones have done their due diligence about a particular person.

To protect yourself, Barbara Roper, director of investor protection for the Consumer Federation of America, recommends the following steps to vet potential advisers:

❚ Make sure the adviser is properly registered. Financial advisers should be registered either as a broker/dealer or as an investment adviser. You can start at BrokerCheck, FINRA’s free online tool. If the person you’re checking is an investment adviser rather than a broker, the tool will send you to the Investment Advisor Public Disclosure database. You should be able to see their employment and disciplinary histories.

❚ Take any disciplinary history seriously. Misconduct reports can be serious. If you haven’t hired this person, you should probably keep looking because most advisers never run afoul of regulators.

❚ Look for, and verify, credentials. People offering money advice should have at least one credential that signifies a rigorous financial education and adherence to a code of ethics, such as certified financial planner or chartered financial analyst. CPAs who are personal financial specialists meet requirements similar to a CFP. You can verify an adviser’s credential at the sites of the organizations that granted them – the CFP Board of Standards, the CFA Institute and the American Institute of Certified Public Accountants.