Money Matters
Who's watching your money? An expert guides you in finding a good financial planner.
How do you decide who handles your money? According to Jack
Waymire, author of Who's Watching Your Money? The 17 Paladin
Principles for Selecting a Financial Advisor, 75 percent to
80 percent of financial advisors are really sales reps masquerading
as advisors. We recently talked to the author to learn how
entrepreneurs can choose wisely.
Entrepreneur: What are the most common mistakes
entrepreneurs make when looking for a financial advisor?
Waymire: If you think about finding an advisor, two
things generally happen: either you find the advisor, or the
advisor finds you. And unfortunately, a lot of entrepreneurs are on
[many advisors'] hit lists. [Bad advisors] tend to be more
sales-oriented, and they're cold calling, marketing. One of the
biggest mistakes [entrepreneurs] make is that they listen to these
sales pitches . . . and they hire people that sound good as opposed
to looking at the credentials and business practices of the
advisor.
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What should you look for in a good financial advisor?
Waymire: You want somebody who's college-educated
with at least five years of experience--probably 10 years or more.
You want somebody with one or more certifications: a Certified
Financial Planner (CFP), [or another good certification] is a
Certified Investment Management Analyst (CIMA). You want somebody
with a lot of knowledge and a lot of integrity; check their
compliance record at the National Association of Securities Dealers
website (www.nasd.org) to make sure they're clean.
That's the kind of person you want handling your assets.
What are the red flags to look for in a bad financial
advisor?
Waymire: [Many are] only Series 6 licensed--which means
they can only sell products for commissions, they can't offer
advice for fees. You really want a fee-based advisor because one of
the biggest criteria for avoiding that bad guy is [asking], How
does he get paid? If they only want to sell you products for
commissions, that's a huge red flag. Think about the way you
compensate a lawyer, CPA or any other professional. I pay [them] an
hourly rate; I don't pay a commission.