Be smart about financial advisers

The Savage Truth

No one cares as much about your money as you do. While you may like or respect an investment professional's advice, the ultimate responsibility for handling your money belongs to you.

That responsibility means you must be an active participant in the money management process, doing your homework not only about the investment but about the provider of investment advice and products. Upcoming fiduciary rules will help, but you can't legislate morality.

Here are five things you should always do when receiving financial advice:

Check the background of the adviser or salesperson

That's much easier to do these days, thanks to a new resource called It combines search engines from various oversight agencies (including FINRA's BrokerCheck search engine). lets you easily check the backgrounds of not only brokers and investment advisers, but commodity advisers and professionals ranging from accountants to insurance professionals.

Created under the Dodd-Frank mandate, and supervised by the U.S. Commodity Futures Trading Commission (CFTC), is by far the most thorough way to check disciplinary histories of financial professionals. CFTC officials say they are now working with state agencies to include their registrants for various professional certifications.

Get a second opinion

There is no investment so urgent that you can't take time to get a second opinion. There are many slick salespeople out there who present a good case for why you have to "get in now" on this great deal. The herd instinct is the most dangerous aspect of investing, and it is based on both ignorance and greed. Take a step back before going over this cliff, and get the opinion of a knowledgeable person with no interest in selling this product.

Consider the motivation

Why is someone letting you in on this good deal, be it investment management or the sale of a product or service? There has to be a reason -- and typically that reason is a fee or commission. Ask for disclosure of any and all fees in writing by the salesperson, with his or her signature on the paper and not in the form of fine print in a sales contract.

There are plenty of no-fee companies offering less expensive products. But you have to go their websites or toll-free numbers and make the effort to learn about them. That's how Fidelity and Vanguard and T. Rowe Price keep costs down and put more of your money to work.

There's nothing wrong with paying for good advice. But how will you know the advice is good without doing your own homework?

Remember, there is no free lunch, or dinner

Why do you keep getting invitations to a special lunch or dinner where a product or service -- ranging from life insurance to annuities to estate planning -- will be "explained" to you? Because that's how salespeople get clients. It works! Rarely do you go home mulling the education you receive. Instead you sign on the line to get the process going. And there goes your money!

Never give away your power

Never, ever give away your power of approval on all investments. An adviser may ask you to sign a "discretionary power of attorney" so he or she can make all decisions, without "bothering" you. Run away from any adviser who asks for that power. And never be afraid to question anything on your account statement that you don't understand. It's your money!

Blind trust in an investment professional is a sure recipe for financial disaster. Respecting your adviser is critical. But respect must be based on knowledge -- your knowledge. That requires doing your homework. And that's The Savage Truth.

Terry Savage is a registered investment adviser and the author of four best-selling books, including "The Savage Truth on Money." Terry responds to questions on her blog at

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