You will dramatically reduce your exposure to bad financial advice and potential scams if you learn to ask the following seven questions before you select a financial advisor. You will have additional questions, but make sure you always ask the ones on this list.

1. Can you prove you are licensed to provide investment advice, services, and products?

You want a Yes answer. However, you should make advisors prove they are licensed by providing a Central Registry Depository (CRD) number. Use this number to check the advisors licensing atwww.FINRA.org and your states Securities Commissioner.

2. How do I know you are who you say you are?

Unethical, unregistered advisors may steal the identity of legitimate advisors, including their CRD numbers (See Question One). You should take the following steps to verify their identity:

• Ask to see their drivers license with photo
• Visit the advisors websites and view their biography photos
• Make an onsite visit to their offices
• View certification documents that display their names

3. Are you a Registered Investment Advisor (RIA) or an Investment Advisor Representative (IAR)?

You want a Yes answer. RIAs and IAR registrations permit advisors to provide financial advice and services for fees. In addition, RIAs and IARs are held to the highest ethical standards in the financial services industry. If advisors do not hold RIA or IAR registrations they are sales representatives who have securities licenses that limit their activities to selling investment products for commissions. They are also held too much lower ethical standards than RIAs and IARs.

4. Do you acknowledge you are a fiduciary when you provide financial advice and services?

You definitely want a Yes answer to this question. RIAs and IARs are fiduciaries, but it is important they acknowledge this status in writing. Fiduciaries are held to higher ethical standards which require them to always put your financial interests ahead of their own. A No answer means the advisor is really a sales representative who is masquerading as a financial advisor to win your trust and sell you products.

5. Can you document your years of financial services experience, education, and industry certifications?

You want a Yes because these criteria are the primary components for advisor competence. Do not accept a verbal response to your question. You should require written proof from FINRA, the SEC, or your states Securities Commissioner. Terminate your discussion with any advisor who will not provide documentation for this critical information.

6. Can you document you have a clean compliance record?

You want a Yes answer because this information impacts advisor ethics. Require advisors to show you their compliance records at FINRA.org. Terminate your discussion with any advisors who will not document his compliance record. Advisors who hide information increase your risk of bad financial advice.

7. Will my assets be held by a name brand custodian?

You definitely want a Yes response to this question. If the advisor uses a third party custodian, it should be a brand name, for example: Schwab, Fidelity, Pershing, or TD Ameritrade. If the advisors firms act as custodians then they must be brand name firms that are responsible for billions of dollars of assets. Never give advisors access to your assets except for their fees. Terminate your discussion with any advisor who wants physical contact with your assets. By law, RIAs and IARs cannot take physical possession of client assets.