As a dermatologist, you are well accustomed to patients understanding the value of a specialist. They are coming to you, in fact, for help with skin-related medical issues because you have specialized in helping patients take the best possible care of their skin. This seems so obvious it is hardly worth mentioning.
The way things work in the financial world, however, can be anything but obvious. Many dermatologists, at one time or another, have gone to a financial advisor. Using the analogy above, you would expect your financial advisor to take the best possible care of your money. Unfortunately, stories about financial fraud and mismanagement make many investors wary of financial advisorsâwith good reason. However, itâs important to remember that just as there are financial advisors with dishonest practices, the vast majority truly want to give you the best level of financial care possible. How can you distinguish the good advisors from the bad and protect yourself from financial misconduct?
These red flags will help you learn how to choose wisely by spotting common unethical practices and mistakes people makeâand avoid them.
Do Your Due Diligence
It can be overwhelming to research and meet with different advisors, so it may be tempting to take the first recommendation you get from a friend or family member. After all, if it worked for them, it will work for you, right?
Not necessarily. You have no way of knowing what kind of relationship this person has with the financial advisor or even what they value in an advisor. And since each financial plan, planning process and investment portfolio is different, an advisor that meets your friend or family memberâs needs may not be able to meet yours.
You should still do your own background check on your financial advisor. If they are accredited, verify their accreditation. Also ask the advisor about fees and to identify his or her licensing or supervising organizationsâdepending on the type of financial professional, this may be the CFP board, FINRA, the SEC or a different organization. Using the organizationâs website will allow you to do a more thorough background check and see if the advisor has a history of disciplinary action.