"It's not like the pendulum has swung completely to people being overly skeptical. People are just becoming as skeptical as they should have been," says Loeper. "There's not a sales pitch out there that's used on math by the financial services-peddling industry that hasn't fallen apart.
"Most advisers will ask you what your tolerance for risk is, and they will proceed to position you in a portfolio that will ultimately experience that risk, regardless of whether it's necessary or not."
Such an approach embraces pie-in-the-sky dreams of wealth somewhere down the road rather than focusing on the client's long-term goals, such as retirement age and desired monthly income, Loeper says.
"That means that they're not evaluating whether accepting that amount of risk makes sense for what you're trying to achieve," he says.
4. Linking past performance to future resultsWe've all seen the disclaimers at the bottom of the TV screen during mutual fund commercials about the dangers of linking past performance to future results. Still, some advisers try to judge investments -- and sell them to you -- based on last year's returns.
"If (past performance) is not indicative, then why would I look at it?" Loeper says. "A track record is really only useful to you if you have a time machine, and I haven't met anyone who has one yet."
5. Failure to maintain basic investment safety standardsAdvisers who push products that don't meet common-sense safety standards probably aren't looking out for your best interests, Pomeranz says.
Avoid complicated investments or "anything you have trouble understanding as an investor," he says. "If the prospectus is more than a quarter-inch thick, watch out."
Qualities of good advisers
- Identify investing purpose and goals.
- Make sure goals drive investment choices.
- Discuss risk and minimize it.
- Offer objective advice, avoid conflicts of interest.
- Provide good value for fees charged.
What should you do if you suspect an adviser may be a lemon? Pomeranz recommends getting a second opinion.
"You might want to take your portfolio to an independent financial planner who charges by the hour and ask them to do an analysis of the portfolio," he says. "Not necessarily someone who's trying to get your money -- someone who will just do this as a third party for a fee."
If the adviser finds your portfolio is really out of whack, it's probably time to look elsewhere. During your search, look for these qualities that are common to good financial advisers:
1. Identify investing purpose and goalsA good adviser sits with clients and identifies goals. Pomeranz starts by asking clients how much income they want investments to generate.
"I ask them, 'What do we need out of this portfolio? What do we want this portfolio to provide us? What's the purpose of it?'" he says.
Loeper emphasizes the need to consider all goals -- retirement age, savings rate, retirement income and risk -- equally and independently.
"It's not really to define clear objectives," Loeper says. "It's to find a range of ideal and acceptable objectives and then discuss what priorities you have as far as what you'd be willing to spend in one objective to buy another that you value more."