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Build A Financial Team You Can Trust


Building a team of financial professionals can be an intimidating task. Learn how to recognize and protect yourself from unethical practices to avoid making mistakes in the selection process.

If you need legal advice, you go to a lawyer. If you need to plan a vacation, you go to a travel agent. And, if you need a financial plan, you go to a financial advisor. Just as you would expect a lawyer to know the ins and outs of the law, and a travel agent to get you the best possible deal on your trip to Mexico, you would expect your financial advisor to take the best possible care of your money. Unfortunately, stories about financial fraud and mismanagement make people wary of financial advisors—with good reason. However, it’s 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? The following red flags will help you learn how to choose wisely by spotting common unethical practices and mistakes people make—and avoid them.

Personal Recommendations

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 is different, an advisor that meets your friend or family member’s 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 organizations—depending on the type of financial professional, this may be the CFP board, FINRA, the SEC or a different organization. Using the organization’s website will allow you to do a more thorough background check and see if the advisor has a history of disciplinary action.

Check Your Checks

Your financial advisor should never ask you to write a check out to him or her personally for an investment. Instead, the check should be made directly to the product sponsor, such as the mutual fund company in which you are investing. If an advisor tells you that he or she will deposit the check and make sure the funds go to the investment, he or she could simply keep the money and then falsify investment statements. If an advisor suggests this, it is a cause for concern. You should question any situation that involves giving a financial professional unlimited access to money intended for investment—and if you’ve found a financial advisor that puts your needs ahead of theirs, this shouldn’t happen.

Fill In The Blanks

If a financial advisor offers to complete any type of financial form “to make things easier for you,” insist on doing it yourself. At worst, a dishonest advisor could falsify your information. At best, a careless advisor with good intentions could make an error on the form. This can be dangerous if your income or net worth is misrepresented, as it could make you eligible for investments that aren’t suited to you, leaving you open to financial loss. Avoid leaving blanks on any financial document you’ve signed, and ask your advisor to send you copies of final documents so that you have evidence of their accuracy should anything occur.

Investment “Opportunities”

Take pause if your advisor offers you some sort of “special” investment and you notice that he or she is handling the details of this investment differently than in the past. For example, if the advisor wants to meet outside of his or her office to discuss it, or if the investment letter appears on different stationery or with a different logo; these may be signs that your advisor is selling an investment the employer doesn’t know about and/or supervise. If so, ask the employer/company directly whether it approves of the investment. If your advisor is a sole practitioner, verify that he or she carries professional liability insurance. Without verification that the investment is legitimate and supervised by the company, you may be unable to make a legal claim should the investment go bad. Remember that investments should always be regulated/supervised by an independent third party and the risks and possible conflicts of interest fully disclosed to the investor.


You should receive regular investment statements from someone other than your financial advisor, such as the custodian of your assets or the brokerage firm that handles your investment. If you receive reports from your advisor, make sure they match with these third-party reports and bring up any discrepancies immediately. If you have any investments that aren’t evaluated frequently or held by a third-party custodian, verify that the investment manager is audited frequently by an independent accounting firm.

Beating The Market

As a financial professional, beating the market is an admirable accomplishment—but no one can promise you that they’ll be able to achieve it. It’s rare to actually outperform the market, and chances are that an obsession with doing so will cause an advisor to seek out higher-risk investments to make it happen. If your advisor pitches investments to you that have high returns with no risk, they may be hiding other costs. Make sure you are getting a fair and comprehensive description of an investment’s pros and cons, and if you find that you’re only hearing the pros, you may want to reconsider. Ask what circumstances would cause the investment to perform worse than projected, and consider changes in both the economy and your own personal circumstances. Overall, you should make sure that investment discussions are focused on your specific needs and how a certain investment can meet those needs, not simply on why this one investment is the greatest of them all.

No Pressure

Whether your advisor is asking you to make a decision about an investment or policy in a very short time frame or approaching you with a major financial decision just after a devastating life event, such as death or divorce, remember that you are still in control. You should be cautious of any pressure tactics during a major life change, when your decision-making ability may be compromised. If this is the case, you may want to find an advocate, such as a close family member, to help you with any urgent financial decisions, such as tax deadlines. On less urgent decisions, it may be best to wait for a while until you’ve had some time to heal mentally. If you feel your advisor is trying to rush you into any kind of decision, speak up. Make sure you know your advisor’s fee structure and look into if your purchase of a policy or investment in a certain time frame will give a generous kickback. Look for warning signs such as repeated visits to your home or repeated calls, tactics which fraudulent advisors may use to wear clients down so that they sign off on something. You should also remember that many insurance policies or annuities offer a “free look” period, which gives you a window to back out without incurring penalties. Your advisor should recognize that financial decisions are important and give you the time and space necessary to make them; if not, ask yourself whether he or she truly has your best interests in mind.


Many people think if they have a financial advisor, they don’t need to be educated about finance. However, you need to at least know enough to be able to assess if your advisor is helping you. If you don’t understand something, ask. Your advisor may have completely ethical intentions but simply not know that you don’t understand him or her. It’s the advisor’s job to make sure you understand any advice given to you, but an advisor can’t do that if you claim to understand something when you don’t. If you understand but still aren’t sure it’s the best plan, you can always get a second opinion from another advisor.

Bottom Line

You don’t want to go into a relationship assuming your advisor will treat you badly. Instead, be on the lookout for any signs of misconduct, and consider the motto “Trust, but verify.” When dealing with financial professionals, you should trust that they can handle your finances—but that doesn’t mean blindly giving them control. Make sure you are verifying that your money is going where it should. If you feel that you are being mistreated, you can file a complaint with the advisor’s company or, if applicable, his or her licensing or supervising organization.

Click here for a free workbook put together by Schwab that will be a great starting point for finding the right advisor for you. And as always, you can reach us with any questions you might have: 215-709-5100 or