If you want a fee-only adviser, there are a few things you should do, Scott says.
Many financial firms disclose any broker-dealer relationships on their website, says Scott. To avoid fee-based operations, look for language indicating that securities are offered through a "broker-dealer."
You can also visit the website of the Securities and Exchange Commission and access a company's Form ADV. This will reveal the firm's compensation structure.
An easier way to ensure you are getting a fee-only -- as opposed to fee-based -- adviser is to visit the website of the National Association of Personal Financial Advisors, or NAPFA. All firms that are members of NAPFA meet strict fee-only criteria.
If you want extra protection, Scott suggests asking your adviser to sign a fiduciary oath stating that the adviser pledges to do the following:
- Act as a fiduciary 100 percent of the time. This means the adviser will put the client's interest first, ahead of the interests of the adviser or the adviser's firm.
- Disclose all conflicts of interest.
- Accept payment only from the client for services rendered.
- Refuse to accept referral fees or commissions that are contingent upon the purchase or sale of a financial product.
"If a financial professional won't sign a fiduciary oath, (then) they do not act as a fee-only registered investment adviser at all times," Scott says.