How to select a financial services provider

Consumers can protect their investment dollars by learning how to select the right financial service provider.

Federal and state securities laws require brokers, investment advisers, and their firms to be licensed or registered, and to make important information public. But it’s up to consumers to find that information and use it to protect their investment dollars. “Financial Services Providers have a social imperative to deliver the very best to their clients” says Mark B. Robinson, CIMA, AIFA, developer of Michigan’s Investor Education in Your Community. As salesmanship moves to stewardship and “sizzle” moves to science, Robinson believes that financial professionals are compelled to get it right – focusing on the needs of clients first and foremost. Consumers are faced with increasingly complex saving and investing options. Below are a few definitions and a basic checklist that will take some of the mystery out of choosing a do-it-yourselfapproach or deciding to work with a professional.

Registered Investment Advisers:  According to the U.S. Securities and Exchange Commission, Registered Investment Advisers, or RIAs, provide ongoing advice as a matter of course.  RIAs are held to a fiduciary standard of care. Other names for RIAs include investment manager, investment counsel, asset manager, wealth manager or portfolio manager.

Brokers:  Brokers are in the business of buying and selling securities for their customers and are held to a “know your customer” standard. Officially referred to as Registered Representatives, brokers are also known as:  stockbroker, financial consultant and financial adviser.

Financial Planners (non-legal term):  Financial Planners are generally in the business of developing and implementing comprehensive financial plans for customers based upon long-term goals, including estate, tax and insurance planning.  

Insurance Agents:  Agents are licensed by the states in which they do business.  In general, insurance agents offer insurance-related investment products including fixed and variable annuities, whole life, term life and variable life policies. Compensation is typically commission based.

Selecting a financial services professional - ask yourself:

  • Am I interested in developing a comprehensive overall and goal-oriented investment strategy?
  • Am I interested in receiving specific investment recommendations on an intermittent basis?
  • Do I need comprehensive financial, insurance and estate planning services?
  • What level of involvement do I want in the decision-making process?
  • How do I want to pay for these services:  a fee, commission, a percentage of assets?

Decided to work with a professional - ask your provider:

  • What experience do you have, especially with people in my circumstances?
  • What are your qualifications and what is your experience?
  • What licenses do you hold? Are you registered with the Securities and Exchange Commission (SEC), a state, or the Financial Industry Regulatory Authority (FINRA)?
  • What is the scope of the services you provide?
  • Do you provide periodic portfolio performance reports?
  • How do you charge for your services?
  • Who else may be handling my account?
  • Will you provide me with a recent copy of your U-4 or form ADV Part I and Part II?

Questions to ask regarding investment recommendations:

  • Is the investment being recommended registered with the SEC and my state securities regulators?
  • What is the purpose or objective of this investment?
  • Is it consistent with my investment objective, my risk tolerance and my investment time horizon?
  • How does it fit into my overall investment strategy?
  • What costs are associated with purchasing, maintaining and selling this investment?


State of Michigan’s Office of Financial and Insurance Regulation, Investor Education in Your Community®, Mark B. Robinson, CIMA®, AIFA®, Developer and Lead Presenter

U.S. Securities and Exchange Commission


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