What to Know… Before You Go Pro 

Sometimes we need an expert’s help in reaching our goals.  A financial professional can help you succeed in saving for the future. But it’s important to do your research before selecting a financial professional to assist you in reaching your long-term financial goals.  

Titles & Designations 

There are different types of financial professionals. Understanding the myriad of titles and designations will help you select the right person for the job. Be aware: there are some made-up titles and designations intended to deceive investors. The list below is not complete, but it includes some of the more common titles you’re likely to encounter. A complete list can be found at FINRA.org.  

Broker-Dealer Agents 
Broker-dealer agents sell securities and other investment products. Other terms include: broker, stockbroker, financial adviser, or registered representative. Broker-dealer agents are obligated to make sure the securities they recommend are suitable for clients. 

Investment Advisers 
Investment adviser representatives give advice about securities and other investment products and provide ongoing management of investments based on your goals. Investment advisers have a fiduciary responsibility to act in your best interest.  

Financial Planners 
Financial planners design an overall plan to help you save, invest, and manage money. If they provide specific investment advice, then they must be registered as an investment adviser and are subject to fiduciary duty.  
 

Selecting a Professional 

Selecting a quality financial professional takes time and research. Many investors start their search by seeking referrals from friends and family members. This is a good starting point, but don’t rely solely on the testimony of others. Just because someone else made money does not mean you will or that the investment is legitimate. Check that any recommended professionals are registered with the Indiana Securities Division and/or the U.S. Securities and Exchange Commission (SEC). Schedule introductory meetings with the top candidates. You shouldn’t have to pay a fee for this initial meeting.  

Questions to Ask 
Before choosing a financial professional, there are some questions you need to ask. These questions are not exhaustive, and the answers may raise additional questions to be answered before you decide to entrust someone with your money. You may want the answers in writing.  
 

What is your training and experience? 
How long have you been in the business and what did you do before? You are looking for someone who has been in business for several years and has the background to deal with your particular issues. They should be able to provide you with their licenses, registrations, qualifications, and experience. Additionally, ask for their CRD Number, which refers to a database that holds information regarding financial professionals. Anyone licensed to sell securities in the U.S. has a CRD number.  
 

Are you required to always act in my best interest? 
This is a quick and easy way of identifying whether you are speaking with someone who has fiduciary duty. Some professional designations have fiduciary duty, and some do not. If a professional is going to provide you with investment advice, they should be bound by a fiduciary duty. If you simply want a professional to help you buy or sell securities, they are not required to act in a fiduciary capacity.  
 

What is your investment philosophy and your track record? 
You want someone whose investment philosophy is aligned with your objectives and who will appreciate and abide by your tolerance for risk. An adviser that you are considering should be willing to give you references to other clients or information on how other clients’ portfolios have performed. If they are reluctant, that’s a red flag.  
 

Can I have a copy of your regulatory disclosure forms? 
Planners and advisers who are paid to give advice about investing in securities must disclose details about their investment style and philosophy, training, disciplinary record, fees and charges, and more. The best and most widely used disclosure form is Form ADV, which has two parts. Part 1 has information about the adviser’s business and whether they have had problems with regulators or clients. Part 2 outlines the adviser’s services, fees, and strategies. You can view an adviser’s most recent Form ADV at the SEC or FINRA website, but it should also be available on an adviser’s personal website as well. Always check with our office for complete information about the professionals licensed in Indiana. 
 

How will our relationship work? 
You will want to know whether you can expect to talk to your adviser directly or more likely be interacting with a member of their staff. You also want to ask how often you can expect to communicate with the adviser. Once a year? Every three months? More frequently? Is the adviser willing to take spur-of-the-moment phone calls? 
 

How are you paid? Explain commissions or fees you may charge.  
Typically, there are two ways a financial professional will charge for their services: by accepting commissions on the sale of specific products or charging fees, either hourly or as a percentage (generally 0.75% to 2%) of your assets under management (or AUM). It is possible to pay a combination of fees—perhaps an hourly rate for consultations, an annual retainer for general financial advice, plus a percentage of your assets if you sign up to have the adviser manage your money. Any arrangement can work as long as you are aware of and comfortable with the terms. FINRA provides more information about fees and commissions.  
 

When It May Make Sense to Seek Professional Guidance 

• You have changed jobs and need help transferring your retirement savings. 
• You are getting married and need assistance merging your financial lives. 
• You have received an inheritance and need direction on how to invest it. 
• You have lost money in your retirement accounts and feel a professional would help you make better choices.   
   

Registration & Regulation

In the state of Indiana, securities and the people who sell them are typically licensed and registered with the Indiana Securities Division. Background checks are your best defense against securities fraud. That’s why we always recommend you investigate before you invest. Start the process by using our Registration Search to search for securities products and Broker Check to review individual registrations. Some products or individuals may be exempt from registration.  If you have any questions regarding a product or individual, please contact the Securities Division.