How to Choose a Financial Adviser and Steer Clear of Money Scams

How to Choose a Financial Adviser and Steer Clear of Money Scams

•  3 minute read

Take a close look — beyond the clothes and glib talk — before you entrust money to anyone.

During my last year in high school, I landed a competitive summer internship at a place where upwardly mobile high school seniors and college undergrads would be exposed to the world of business with the support of mentors.

While I wasn’t thrilled about working at an insurance company, I was ecstatic about wearing heels, working on Wall Street, and pulling in a cool $10 an hour in an air-conditioned building while my not-so-rockstar friends had to brave New York City’s summer heat as camp counselors with unruly children, or else flip burgers in polyester uniforms at Burger King.

Even though I didn’t want to show it, I was pretty impressed with myself. In fact, I was super impressed. My mentors loved my contributions to the team, I was improving my writing skills, and I “did” lunch with fellow interns almost every day.

 

Choosing a Financial Adviser: My Adventure

During one of our power lunches, I mentioned to one of my intern friends, Delanie, that I wanted to start investing, since I was, of course, a Sheryl Sandberg in the making. Working in close quarters with high-powered executives was beginning to rub off on me, and I wanted to lean in — all the way.

I didn’t want to just look like Wall Street, I wanted to play like Wall Street.

“I have a financial investor friend who can help you,” Delanie said. A few days later, she told me to meet her friend at a local Subway at 5 p.m.

Further Reading: “Partner With the Right Financial Adviser”

I arrived at Subway early so that I could get myself focused and calm. In my purse, next to my lip gloss, I had a check for $1,000 — all the money that I had saved up to that point. Everything was filled out, with the exception of “pay to the order of.”

Choosing a Financial Adviser:
4 Questions to Ask

When it comes to hiring a financial adviser, it’s important to do your homework. Here are key questions to ask before handing over your money:

  • How well does the adviser know your goals, objectives, and plans?
  • Does the advisor understand your experience and your risk tolerance?
  • If an adviser takes the time to listen to what you’re trying to do with your financial planning, you have a good shot at a successful relationship.
  • Anyone who wants to know upfront how much you have to invest or gives you recommendations without knowing your personal goals is not taking your needs into consideration. Find someone who will.

If you need financial advice, start with Blooom. If you’re a self-starter, Investopedia’s online courses will help you learn all you need to know about finance, trading and investing.

So I sat there waiting for my new financial adviser, again in awe of my maturity. I was grooming myself for financial excellence. I saw myself and my financial adviser working closely together, with deep “meeting of the minds” encounters in which we poured over financial statements and he showed me how he made me a millionaire.

But when I finally met my financial adviser — a man whom I had neither spoken to nor met before — something didn’t feel quite right.

It’s a Scam!

My financial adviser was a very handsome man — young, tall, and with impeccable taste. His suit was well-tailored, and he smelled delicious. After a few pleasantries, he went straight for my checkbook. No folder with my name. No discussion about my life or my goals. And no spreadsheets.

“So how much money do you have?” he asked dryly.

“A thousand,” I replied, feeling a bit sheepish.

“With you?”

“Actually, no I don’t. I left my checkbook at home,” I lied.

Further Reading: “Do I Need a Financial Adviser? Tips for Broke Folks”

 

A Mother’s Advice for Avoiding Money Scams

When my well-tailored thief got up to leave Subway, I knew that I had avoided something big. But I didn’t realize just how big it was until I went home and told my mom about what happened.

“Kara, you can’t trust anybody with your money!” she said.

“But he was wearing a suit, Mom,” I replied.

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Then she broke it down Antiguan-style so I could really understand: “You no know nottin’ ’bout life. A well-dress thef — a di biggest thef.”

Translation: “You don’t know anything. A well-dressed thief is the biggest kind of thief.”

 

How to Choose a Financial Adviser the Right Way

It took another 20 years to fully understand how stupid I was by choosing a financial adviser based on style and appearance until I met James. He’s my current adviser, and I’ve stuck with him for nearly a decade.

True financial advisers value building relationships. They put clients before cash. They ask you questions about your risk tolerance, your life goals, and your values.

Excellent financial advisers meet with you bi-annually to discuss your portfolio and make adjustments accordingly. Before making a leap into the world of equities, make sure that you have the right people on your team.

Further Reading: “You Should Fire Your Financial Adviser If They Are Not a Fiduciary”