hOW TO chOOSE AN EXPERT AdvISERing me to sell products instead of helping people build and enjoy their
retirement.
On the other hand, you could work with someone like me, who is part of
a registered investment advisory firm. We are known as registered in-
vestment advisers (RIAs) or investment adviser representatives (IARs).
We, unlike registered representatives, have a fiduciary responsibility to
our clients. Let’s go back to the same scenario I used a moment ago, but
instead of a registered representative, we have an adviser who is an IAR
and registered with a registered investment advisory firm. If that adviser
were to recommend a product that was not in the best interest of the
client—let’s say he sold a product that would line his pockets with ad-
ditional compensation and commission, but not necessarily improve the
retirement portfolio of the client—he could potentially lose his license,
have to pay fines, and, depending on how severe the offense, go to jail.
The good news is that Congress is working on financial reform regula-
tions. The legislation would require stockbrokers, insurance agents,
and other financial advisers to have the same fiduciary responsibility
standard that RIAs have. All of the big brokerage firms are fighting this,
and they have a lot of money and some powerful lobbyists with which
to do so. They don’t want the laws to change, because if they do, their
advisers are going to have to start acting in the clients’ best interest,
not in the firms’ best interest. And, of course, that would bring down
their profits and revenue.
(3) ARe YoU A MeMBeR oF the nAtIonAl
ethICs AssoCIAtIon?What’s with all those letters after the adviser’s name? You may see cer-
tified financial planners (CFPs), personal financial specialists (PFSs),
chartered financial analysts (CFAs), registered investment advisers
(RIAs), registered financial consultants (RFCs), wealth management
specialists (WMSs), or any one of many, many other designations. Most
investors don’t know the difference between these letters and licenses.
It can be difficult to sift through all the different licenses, firms, and
titles. The first thing I usually recommend is that investors work with a
member of the National Ethics Association (NEA). Every NEA member
has gone through an extensive background check. Before I became a
member, the bureau looked extensively into my background, including