Finance Finding the right fit for financial guidance

Finding the right fit for financial guidance


Getting started can be one of the hardest parts of any task, whether it’s cleaning the garage or plotting the course of your financial future.

While most household chores require only the will to get moving, finding someone to help when it comes to financial planning is a more sizeable undertaking. With so many investment service providers to choose from, how does a consumer find the right fit?

The Office of Securities is one of five agencies within the Maine Department of Professional and Financial Regulation. Doug Dunbar, communications director for the department, said the Office of Securities website is a “good place for potential investors to start when considering a financial adviser.”

Accessed through, the site offers numerous resources to assist investors, including educational brochures found in the “Consumer Tools” box on the homepage. The website also provides a way to obtain information about specific financial professionals under the “Check a Broker or Adviser” tab on the left hand side of the main page.

Locating an adviser is just part of the process. The Maine Office of Securities offers a list of tips for consumers undertaking the process through an “Informed Investor” advisory provided by the North American Securities Administrators Association, an organization of which the department is a member.

The first step the advisory suggests is to verify information about the broker, investment adviser or financial planner under consideration. Properly registered or licensed brokers and investment advisers will have a unique identification number that has been assigned by the Central Registration Depository, a database jointly run by state securities regulators and the Financial Industry Regulatory Authority, or FINRA. The number, which can be searched through Maine’s Office of Securities website or through FINRA, links to information about the broker or adviser, including employment history, certifications, licenses, registrations, and disciplinary actions.

Once a financial adviser’s credentials have been verified, the next and likely most important step in the process is to sit down with the individual under consideration. The Maine Office of Securities suggests that consumers include the following questions in their conversation with a potential adviser:

Are you a broker, investment adviser representative, financial planner or a combination? What services do you offer? What qualifications and experience do you have to offer these services? Are you required to always act in my best interest? Do you have any potential conflicts of interest when providing me with investment advice? How are you paid?

Be sure to ask the adviser to explain any commissions or fees charged.

According to the North American Securities Administrators Association, when the services of a broker are utilized, clients typically pay a fee each time a security is bought or sold on their behalf. Investment adviser representatives, on the other hand, give advice and provide ongoing management of investments based on clients’ objectives and charge a flat rate or an asset-based fee. The compensation structure must be disclosed to the client.

Financial planners design an overall plan for their clients to save, invest, and manage their money and must be registered or licensed as an investment adviser representative if they provide specific investment advice, such as recommending particular financial products or investments. Fees charged by financial planners vary and could be hourly, flat, asset-based, or commissions based.

The bottom line in the client-adviser relationship is trust, according to Maine Securities Administrator Judith Shaw, who is an attorney licensed to practice in Maine. She began her career with the state in the Office of the Attorney General, specializing in administrative and financial services law representing the Bureau of Insurance. She joined the Bureau of Insurance as deputy superintendent in 2001 and in 2008 was appointed administrator for the Office of Securities.

“Working with a financial adviser requires a willingness to put your faith, trust and financial security often in the hands of a complete stranger. It is important that your decision be an informed one,” said Shaw, who is also president-elect of the North American Securities Administrators Association.

“The financial adviser should be properly licensed so that they are subject to all of the same regulations as other financial advisers and you have recourse should something go wrong. Also, it is important to get information about their background. Have they been subject to any disciplinary actions? Do they have a criminal background? What about bankruptcies or liens? While you may decide that information you find does not matter and you still want to work with the individual, your decision should be based on having all of the facts.”

It is also a good idea to ask the adviser to explain his or her investment philosophy.

FINRA advises consumers to be wary of anyone who offers “sales pitches that make exaggerated claims about the expected profitability of a particular investment, or make specific price predictions, such as, ‘your money will double in six months.’”

The regulatory authority also suggests that consumers “steer clear of any investment professional who pressures you to invest quickly or refuses to provide information for you to consider carefully.”

And, according to FINRA it isn’t just the client who should be asking questions.

Financial professionals are required to deal with clients fairly. FINRA’s suitability rule states financial advisers “must have a reasonable basis to believe that a transaction or investment strategy involving securities that they recommend is suitable for the customer … based on the information obtained through the reasonable diligence of the firm to ascertain the customer’s investment profile.”

To help ensure that customers receive suitable investment advice, FINRA requires financial professionals to learn as much about a customer’s investment profile as possible before recommending any securities transactions or investment strategies.

A bona fide professional will take the time to ask clients their age and about any other investments they may have; financial situation and needs, tax status, investment objectives, experience, and investment time horizon, along with risk tolerance, which is the comfort level a person has with losing some or all of the original investment in exchange for greater potential returns.

The Maine Office of Securities is open to any and all questions when it comes to helping consumers make informed decisions about investment matters.

“We welcome and encourage calls. The toll-free number in Maine is 877-624-8551,” said Dunbar. “Anyone with questions about financial professionals, or whether a particular investment product is registered to be sold in Maine – many must be – or seems legitimate, should contact the Maine Office of Securities for guidance.”

Faith Gillman is a staff writer at Current Publishing.

My GenerationJudith Shaw has been the administrator for the Maine Office of Securities Maine since 2008. Shaw recommends that consumers get as much information as possible before choosing a financial adviser.Courtesy photo


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