As Ronald Reagan used to say "Trust, then verify". Start off by thinking of the handful of people you know best and trust the most. Then ask if they can refer you to an advisor whom they trust and who, they feel, delivers good value for his fees. A vote of confidence from someone you admire a a good start.
Once you have the name of the advisor and his firm, as well as his specialty, you can begin your due diligence.
Is he a stockbroker? financial planner? accountant? insurance agent?
Enter the name of the adviser and his or her firm into an internet search engine like Google to see if anything comes up (watch for terms like "fine", "complaint", "lawsuit", "disciplinary action" or "suspension").
If the adviser is a stockbroker or insurance agent, contact the office of your state's securities commissioner to ask whether any disciplinary actions or customer complaint have been filed against the adviser.
If you're considering an accountant who also functions as financial adviser, your state's accounting regulators will tell you whether his or her record is clean.
Financial planners (or their firms) must register with either the U.S. Securities and Exchange Commission or securities regulators in the state where their practice is based. As part of that registration, the adviser must file a two-part document called Form ADV. You should be able to view and download it at www.advisorinfor.sec.gov, www.iard.com or the website of your state securities regulator.
Pay special attention to the Disclosure Reporting Pages, where the adviser must disclose any disciplinary action by regulators.
It's a good idea to cross-check a financial planner's record at ww.cfp-board.org, since some planner who have been disciplined outside their home state can fall through the regulatory cracks.
- The Intelligent Investor, Benjamin Graham
