Reduce chances of broker misconduct with careful vetting


When someone is looking for a financial advisor, it is often because he or she wants sound advice from a trustworthy source. Investing is inherently a risk, but an investor does not want the risk to involve being a victim of broker misconduct. New York investors may wonder how to know if a financial advisor is trustworthy.

Whether one is looking for someone to help with long-term income planning, basic financial advice or investment services, finding someone with experience and integrity is crucial. An advisor may have many credentials, but an investor should do some homework to learn which are legitimate and which may be for appearances only, such as mail-order certifications. An investor can look for credentials from reputable organizations that require passing an exam and continuing education.

It is also wise for an investor to do some checking before handing over any money. Researching an advisor’s history through the Security and Exchange Commission and other agencies can give one an idea of any complaints or problems. An advisor who uses a third-party custodian to protect an investor’s money is less likely to commit fraud than one who has sole custody of the assets. It may also be a red flag when an advisor has ownership in any investment opportunities he or she recommends to investors.

Checking references, asking the right questions and making sure one fully understands the answers are all important steps in the vetting of a financial advisor. However, even these steps may not fully protect someone from broker misconduct. New York investors who feel their advisors may be mishandling their funds are wise to seek legal counsel as soon as possible.