3 ways to spy on your financial planner

Choosing a financial adviser
By Jean Chatzky

Financial advisers signal to investors they're trustworthy in a lot of different ways -- a posh-sounding name, financial certifications and plush offices, among others. But how much do you really know about the person you're trusting to invest your life savings?

After all, this is the professional who's going to guide you as you save for college, retirement and other important milestones. You are entitled to more than mere verbal assurances and fancy titles -- you need cold, hard facts.

Check these three places to get the skinny on your money pro.

Where to find out whether a planner is a Certified Financial Planner

To find out if a planner is a CFP, go to the Certified Financial Planner Board of Standards and search by name. You can find out if your financial planner is certified, actively practicing or the target of disciplinary actions by the CFP Standards Board.


To be certified, a financial planner must have a bachelor's degree plus 18 college credit hours related to financial planning and must complete an additional 30 hours of industry seminars in financial planning every two years, including at least two hours on the CFP board's ethical standards, says Tim Stifel, director of stakeholder communications for the Certified Financial Planner Board of Standards in Denver. Individuals also must have three years of experience and pass a certification exam that has a 52 percent pass rate

CFP board ethics require Certified Financial Planners to disclose any conflicts of interest to clients and make recommendations that are in their clients' best interests, says Stifel.

Is your financial planner also a registered investment adviser?

If your financial planner is also a registered investment adviser, you'll be able to learn a lot more about him.

Registered investment advisers have to register with the Securities and Exchange Commission or the state. The yearly forms they file are publicly available and are a jackpot of information for clients and potential clients.

Called Form ADV, the annual filing comes in two parts. Part I will tell you things such as who owns the firm, the amount of assets it manages, the type of clients it serves (individuals, high net-worth clients, pensions, etc.), how many people it employs, disciplinary actions or felonies, and the states where the firm is registered to do business.

This form also will detail how the firm's agents are compensated and will disclose business arrangements with other financial firms (brokers, securities dealers, etc.).

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