The guide lists characteristics older advisors should look for in a financial advisor.

Competence: This one's a no-brainer, but the SOA warns that some credentials warrant further research to ensure what exactly they say about the advisor.
Investment philosophy: The guide warns consumers away from advisors who claim to select superior investments, time the market or sell other market-beating strategies. "It's more effective to look for an advisor who focuses on understanding the client's risk tolerance and need for investment return, and on investments that fit their clients' needs."
Total financial planning approach: The guide cautions that advisors who only recommend one or two products "cannot make good recommendations" because they haven't taken the time to understand the client.
Compensation: Unfortunately, according to the guide, even if investors ask how an advisor is paid, they "may have no way of knowing whether the advisor's recommendations are biased by the size of the commission." SOA recommends consumers look for referrals and references for the advisor before they commit to anything.
Fiduciary versus suitability standard: It's a complex topic to address in under 150 words, but the guide explains that licensed registered investment advisors (RIAs) must operate under a "fiduciary" standard; that is, "they must act in the best interests of the client at all times." The "suitability" standard that most stockbrokers, registered representatives, and insurance agents operate under, according to the guide, requires them to sell products that are suitable for the customer. The guide does mention that the fiduciary standard is under review by the Securities and Exchange Commission and that it may take until at least late 2012 to fully implement the new standards.

The guide also demonstrates how to go about reporting an unscrupulous advisor, noting that it's critical to act quickly when filing a complaint. The guide also recommends hiring a general family attorney if possible, for help with advice and writing letters.

Instant Insights /

SOA releases two consumer retirement planning briefs

More From HR Executive

Related Stories

Recommended For You