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Hiring an Advisor

3 Things to Know When Searching for a Financial Advisor

Can you recall a time you hired a professional, and it just didn’t go as expected?  It’s just THE WORST.  You hire them to save you time, provide intrinsic and extrinsic value, and maybe even educate you along the way.  It’s no wonder so many resort to friends, online reviews, or avoid the process altogether when it comes to making a hire.  We see this trend in our industry, too.

Hiring a financial advisor is a big commitment.  You (and your family) could potentially spend years of your life with this person. Not only that, but it’s a financial investment.  Your options for hiring a professional is overwhelming.  Luckily, there are resources like XY Planning Network and the National Association of Personal Financial Advisors (NAPFA)  that at least provide you with a list of fee-only advisor fiduciaries.  Otherwise known as those who work in your best interest.  Read our Why Hire a Fee-Only Financial Advisor? to learn more.

Your research doesn’t have to end there.  There is more information you should know about when it comes to hiring a financial advisor.  For instance, did you know that as a financial advisor we are not allowed to market any testimonials or reviews?  Did you also know that any formal complaint filed with FINRA or the SEC is accessible for you to see?  Keep reading to learn our three things to know when searching for a financial advisor.

1.  We Cannot Post Testimonials or Reviews

We came across a survey recently that asked an individual why hiring a financial advisor is difficult.  One response was, “I can’t find any reviews!”  The SEC (Securities and Exchange Commission - an independent government agency who oversees people like me and helps protect investors like you) would be overjoyed to hear this statement...but why??  

Rule 206(4)-1(a)(1) of the Investment Advisers Act of 1940 prohibits the use of testimonials of any kind in our industry. See for yourself: “it shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act (15 U.S.C. 80b-6(4)) for any investment advisor registered ....directly or indirectly, to publish, circulate, or distribute any advertisement....an investment advisor is prohibited from publishing, circulating, or distributing any advertisement that refers, directly or indirectly, to any testimonial of any kind concerning the investment advisor or concerning any advice, analysis, report or other service rendered by the investment advisor”

Therefore, even if a financial advisor provides a stellar experience, and their clients would love to tell the world all about it (publicly), it is prohibited.  However, if you are a client of ours (or someone else’s) and you talk us up to your family and friends privately, that is simply a referral.  No rules broken there.  The easiest differentiator is whether or not it is public and/or broadcasted by the financial advisor. 

HOT TIP:  If you want a review from one of our current clients (or any financial advisor’s clients), you can simply ask to speak with one of our clients privately to learn more about their experience with us.  Both parties have to agree to the set up, and the conversation needs to be done privately without the financial advisor present.  


If a financial advisor provides a stellar experience,
and their clients would love to tell the world all about it (publicly),
it is prohibited.


2.  Extensive Oversight

If you are indeed a financial advisor (not a financial coach or financial consultant), there is quite a bit of oversight done on your behalf.  Rightfully so!  It is a major responsibility to help clients build and maintain their wealth, and there have been people who have abused that power.  Therefore, as a financial advisor, you must register with the state and sometimes federal agencies to establish your firm.  This is where the oversight comes in.

Fyooz Financial Planning, LLC is a Registered Investment Adviser firm registered with the state of Minnesota.  In the state of MN, we are required to maintain financial reports (both personally and for business), post a bond of $25,000, and maintain a minimum net worth of $10,000 within the business at all times.  This is just a fraction of what’s required from us, but you get the picture.

Firms can get audited at any time.  This audit can be triggered by a certain event (let’s say a customer complaint… more about this later) or completely random.  Here’s a fun fact for you.  During an SEC investigation, an investment advisor cannot plead the 5th amendment.  As you may know, the 5th amendment is a safeguard designed to protect the rights of the criminally accused.  Instead, every answer during an SEC investigation must be answered fully and completely.  As long as you are acting in the best interest of your clients (a pledge we take at Fyooz), then there is nothing to fret about this.  

Why say all this?  There are a lot of individuals putting themselves out there as a financial expert.  Not all of those individuals actually advise individual clients or make specific investment recommendations, and therefore, do not have to register with the state of federal agencies.  My question to you is… who is overseeing them?  Who is auditing their advice?  Who is auditing their financials?  I’m literally asking because I have no idea.

3.  Complaints and Violations Records are Public

One overlooked option to review a potential financial advisor is through the FINRA and SEC public records.  Again, they actually have to be a financial advisor (not a coach, consultant, social media influencer, etc…) to be on these searchable platforms.  


There are four online platforms to review a financial advisor’s
public records, arbitrations, complaints, bankruptcies, and more. 


BrokerCheck, by FINRA (The Financial Industry Regulatory Authority - an independent, nongovernmental organization that writes and enforces the rules governing registered brokers and broker-dealer firms in the United States), provides you a “snapshot of a broker's employment history, regulatory actions, and investment-related licensing information, arbitrations and complaints.” You will find complaints and arbitrations under the ‘Disclosures’ field.  NOTE: This search field is only for individuals and firms registered as a broker or broker dealer.

Investment advisor Public Disclosure allows you to “view that individual's professional background and conduct, including current registrations, employment history, and disclosures about certain disciplinary events involving the individual.”  This is a better site for advisory firms that hold themselves out as fiduciaries as it looks up both the broker dealer records and Registered Investment advisor firm records.  A more comprehensive report is found on this website for me than in the previously mentioned BrokerCheck portal.

The SEC Action Lookup “allows you to look up information about individuals who have been named as defendants in SEC federal court actions or respondents in SEC administrative proceedings.”  For those of you familiar with the infamous Bernie Madoff $50 billion dollar fraudulent scheme, you’ll find those types of cases here.  Not every case is as massive as that one.

Lastly, for those who have their CERTIFIED FINANCIAL PLANNER(™) designation, as Dan and I do, the CFP(R) board also keeps records of disciplinary history as well as reports of bankruptcy disclosures within the last 10 years.  Bankruptcies can happen for a number of reasons, and unfortunately sometimes those reasons are out of someone’s control.  However, if your financial advisor had a bankruptcy due to their mishandling of money, wouldn’t you want to know about it?  You can find their verification tool here.  


Searching for the right professional is not easy in any industry.  Most folks rely on public reviews to get a glimpse of the service or offering a company is providing.  In our industry, it’s against the law to offer such reviews and testimonials publicly.  However, if you truly want the inside scoop from a client, just let us know and we will be happy to provide a client connection to you.  If you spot a financial professional that does broadcast reviews, they likely are not registered and audited by the state of federal agencies.  As a Registered Investment Adviser firm, our complaints and violations records are made public.  Utilize those resources to help understand any disclosures your current or prospective advisor has.  

We know there is a lot that goes into hiring a professional.  We are here to make the process as transparent as possible for you.  Send us an email to start your research today.  

Disclaimer:  This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the Article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the Article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.

Natalie Slagle
Founder, Fyooz Financial

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