Warning Signs of a Bad Financial Advisor - P. 4

Welcome to the last set of the "Warning Signs of a Bad Financial Advisor" series. This first one came out a few posts back.

The entire series is borrowed from Suze Orman so please visit the actual slide show over at CNBC.

Without further ado...

2. Advisor Wants a Check Directly Made out to Him/Her

The ultimate warning sign is if the advisor asks you to write a check made out to him/her personally. Every check is to be payable to an institution. (i.e. TD Ameritrade, Schwab, etc.,) “This is absolutely essential. More than one "adviser" has flown the coop with dozens of clients' money’ Suze says.

My take -

I think this is pretty obvious, but even if it is, there are still people who are too trusting and fall victim to clever scammers. I'd take it a step further by also asking for a provisional receipt if an original receipt cannot be issued yet. The receipt serves as proof that you paid for something.

And the last one...

1.They Don’t Inform You of Changes

The last warning sign is if your advisor doesn’t inform you of any drastic changes. Suze explains, “If a stock has gone down, or is not performing the way he or she expected it would, you are to hear about it from him/her, not read about your money first in the newspaper.”

My take -

Even the good financial advisors often forget this. It's a service to the client and shows transparency. Of course, this is assuming your financial advisor actually has any knowledge about what's going on. They usually rely on what their head office feeds them anyway.

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Okay, that wraps up this series. I hope you've learned something new as much as I did. Money can be earned if you've lost some in investments. The general rule is that as you grow older, the more conservative you should be with your funds.

Until the next post!