4) Ask the tough questions: Ask for a copy of their U4/U5/U6, a personal credit score, their last two employers and the number of their compliance officer. In addition, you can go to brokercheck.finra.org to see if there have been any disciplinary actions. You will also need the advisors CRD# to complete a search. He/she should willingly give this to you if they have nothing to hide.
5) Pay the extra money for an on going checks and balances system. Use an accounting firm, a local businessman you may have known awhile or an investment attorney to review your accounts.
6) Just because a financial advisor is certified with the NFLPA does not mean they are “endorsed” by the NFLPA. The certification means very little.
7) Bigger can be better. Big firms like Wells Fargo and Merrill Lynch have more stringent compliance rules then smaller independent advisors and deep pockets if the advisor does something wrong. It’s a nice backstop; just don’t let them load your portfolio with their own firm’s investments.
8) If you do want to swing for the fences in a sexy investment, limit it to 25k to 100k, or just 5% of your investable assets.
9) Never put your money into an account directly controlled by the investment advisor. NEVER! Never sign power of attorneys over to your advisor.
10) Don’t be impressed by the client list. High profile players and actors are notoriously bad judges of investment advisors. One uniform trait of advisors who have gone bad is that they have solely targeted athletes and had very little or no other professionals who they managed money for.
John Gillette would hang around the Chargers practices and facilities like a buzzard looking for road kill. Then, head coach, Bobby Ross, would look at him and tell his players (in a southern squeaky twang voice), “I wouldn’t give that guy a dime, slick back hair, pony tail, thousand dollar suits, big Ol expensive car. Hell No!" There are about ten former Chargers players who wish they listened to him.
A lot of common sense, a few weeks of due-diligence, a conservative approach and looking for the red flags can go a long way in picking the right advisor. I have noticed in my twenty-five years of being an agent and my ten years of being in the investment business that those with a boring approach to investing make for the best advisors.
Follow me on Twitter: @Jackbechta
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