Saving for retirement, college and other life events is more important than ever.
Online tools can be helpful if you're financially savvy, but many investors want to deal with a trustworthy financial adviser who can help them set goals and find sound investments.
Finding an adviser who has your best interests at heart is key. News reports about unscrupulous advisers who have stolen investors' money are a sobering reminder to do your due diligence before you invest.
Investors should be skeptical if an offer sounds too good to be true. Very few investments can offer a guaranteed return on the money you invest, and some may involve significant risk. Even if an investment has performed well in the past, it may not continue to perform as well in the future.
Finding a qualified and trustworthy investment adviser involves checking credentials as well as interviewing several potential advisers to find one you can work with over time.
Some tips for checking out an investment professional include:
• Check credentials. What certification does the adviser hold? The financial industry offers a wide variety of certifications, including certified financial planner or registered investment adviser, for example. Ask whether the certifications the adviser holds were obtained through an accredited organization. Does the adviser belong to a professional organization that requires members to adhere to a code of ethics?
• Who does the adviser work for? Does the adviser work for a well-known firm, or is he or she operating independently? What is his or her experience? Does the organization have a physical location and appropriate licensing?
• How is the adviser paid? Does the adviser work for a fixed fee, a commission or does he or she get a percentage of what is sold?A trustworthy adviser should be able to explain his or her compensation to investors.
• Be wary of promises. Very few investments offer guaranteed returns, and they may involve significant risk. An adviser should be able to explain the risks as well as potential rewards of the investments he or she is selling and match your risk tolerance to appropriate investments.
• Check accessibility. How will the adviser communicate with you after the sale? Will he or she be available, and will you get regular statements about your investments? Make sure you check those statements when you get them.
The investment industry and government agencies offer a plethora of tools and advice for investors, too. Brokercheck, a service of the Financial Industry Regulatory Authority, can tell you whether an adviser is registered and whether he or she has been subject to any government action or industry discipline. It also lists an adviser's work history and education.
The Consumer Financial Production Bureau, a relatively new government agency, also takes complaints against financial industry professionals and companies and has important information on investing. It recently published a report on preventing senior financial fraud, "Money Smart for Older Adults."
Mike Harrison is regional director for the Mid Missouri Better Business Bureau, whose mission is to create a marketplace where buyers and sellers can trust each other.