#Money stack clear background professional#
Breaches of fiduciary duty can lose them their professional credentials and can enable you to sue them for fraud and recover damages. There are serious consequences for breaking that trust by taking your money, or even by something small like making trades that earn them a commission without that profit being disclosed to and approved by you in advance. It's a very high level of trust that's backed up by professional and legal enforcement mechanisms. This is a special category of advisor that is ethically and legally bound to act in your best interest at all times. If you want maximum assurance that they won't do anything shady, look for an advisor that is a fiduciary. What you probably don't want to see is account forms from the advisory firm themselves or another unknown entity. The Fidelity forms are important because this means that the accounts are maintained/custodied by Fidelity (the big-name firm you're already comfortable with). The other will be Fidelity account forms - this gives your advisor limited power of attorney (LPOA) to place trades and deduct fees from your account and can be rescinded at any time by notifying Fidelity of your desire to terminate the LPOA. One is your advisor's advisory agreement between you and the firm that outlines the engagement. Generally, at least in my experience, you'll have two sets of forms. It goes without saying that if Fidelity doesn't know the firm you're talking to, run. It's not a guarantee that the investment adviser isn't shady, but at least it's an indication that Fidelity didn't see anything sticking out. In order to manage accounts at a Fidelity/Schwab/etc., investment advisers need to get vetted and approved to manage money there. Lastly, you can also ask Fidelity to confirm that they know this firm. If they don't show up on BrokerCheck or IAPD, that's a red flag. If they don't provide you with their ADV Part 2 directly when/before sending you their advisory agreement, that's a red flag. If the firm doesn't tell you their CRD number to search them on IAPD (names work too), that's a red flag. The IAPD also shows you the history of the individual advisors as well. For Registered Investment Advisers (RIAs), IAPD will show the firm's ADV Parts 1 and 2, which would show you if the firm takes custody of assets, outlines their fee structures, etc. These disclosures will show past history of customer complaints, adverse rulings, disciplinary action, etc. I highly recommend doing this with anyone you're considering. You can also check their background using FINRA's BrokerCheck, or the SEC's Investment Adviser Public Disclosure (IAPD). How do I vet them to make sure it's not some kind of scam? Unless you sign something that authorizes them to make transfers to third-party accounts (whether it's their bank account or anyone else's account other than one in your name), they won't be able to move money out, with the exception of their periodic fee debit.Īllowing third-party transfers would trigger "custody", which leads to much higher scrutiny into their business by their state regulator, FINRA, and/or the SEC (many independent advisory firms avoid custody for this reason). How do I make sure they can't do something like transfer all of my money out of the account? I accepted the answer that most directly addresses my question - however, I can't miss the very loud chorus of voices telling me that this is the wrong move. This question comes from my own lack of knowledge and the huge downside of being wrong, rather than some spidey-sense that they've triggered.ĮDIT: Thank you for all of the helpful answers and comments. If it's a scam, they've done a great job. Note that there is nothing about this advisor or their behavior that has made me suspect anything about them. All of my financial dealings in the past have been with big-name institutions, which made me feel comfortable and that I could trust them. So I'm about ready to take the plunge, but my question is how do I vet them to make sure it's not some kind of scam? I'll have to sign some documents to give them access to my account, but how do I make sure they can't do something like transfer all of my money out of the account? They will need to be able to place trades, but of course the money should remain in the account unless I move it myself. I'll access the account through the same portal I currently use. They have stated that this isn't an account transfer - rather, they will be actively managing my money while it stays at Fidelity. So I'm considering letting them manage the assets. I was contacted about a year ago by one of the many wealth management services out there, and through a number of telecons and reviews they have me convinced that my money would be better off managed by them rather than sitting in a target date fund at Fidelity. Most of my retirement funds are currently in an account at Fidelity.
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