Do you ever find it odd that financial advisors don’t have a lot of reviews about them or their firm? There are no testimonials on their websites or anywhere you search. The reason is simple, due to regulations by the SEC, the government regulating body that oversees investment advisors, won’t allow testimonials. We will go through why financial advisors can’t have testimonials or reviews, why some still do, and what you can do when looking for a reputable financial advisor.
First, the SEC has determined that testimonials could be cherry picked, so you as the consumer wouldn’t know what is a true indication of a good or trustworthy advisor. That is a fair point, because have you ever seen anyone put a negative review or testimonial on their website? Me either. However, a lot of business that is done in the financial industry is done by referrals or word of mouth. Referrals are different than testimonials, the challenge most people have that are looking for a financial advisor is that people like you like to keep the money and financial matters private and sometimes separate from your friends. That means you are looking to the internet for reviews, which you won’t find much of.
You may find some reviews out there, and there are a couple reasons why. One, the reviews may be on third party sites that the investment advisor can’t control. Even if the financial advisor can control it, he/she can’t take the reviews down. The reason you won’t find a lot of reviews on third party sites is because a financial advisor can’t ask you to leave a review like some business do. How often do you hear or see a retail business ask you to leave a review? That is because asking for a review falls in line with the testimonial rule that the SEC has set.
Also, there are people that call themselves financial advisors that technically aren’t financial advisors, such as insurance agents. Insurance agents that sell life insurance and annuities can have testimonials, but they can’t call themselves financial advisors. The issue is a lot of insurance agents don’t know they are not allowed to call themselves a financial advisor and they use the term until a governing body tells them otherwise.
There are some steps you can take to search for a reputable financial advisor even though you can’t find any reviews or testimonials without asking a friend. There are specific terms you should look for. First, making sure they are a financial advisor, and one way to do that is look for a CERTIFIED FINANCIAL PLANNER™ professional. A CFP has a fiduciary duty so they must put your interests first and look at retirement planning holistically. You can do that by going to www.CFP.net.
Another term to search for is an “independent advisor” and you can watch a video or read our definition of an independent advisor here. You have to understand that many financial advisors will also call themselves an independent advisor even though they are truly not independent. Even if they are not completely independent doesn’t make them bad, you just have to understand where some of the conflicts of interests might arise.
Next look at if they have any publications and do they write a blog to help you as a person in or near retirement stay informed. See if they are involved with the community, check the BBB, chamber of commerce, etc. If they have been featured in many publications, then they are sought after as being reputable in the industry. These are typically good signs to look for, however, it is just one thing to look for. Just because they are reputable, make sure they fall in the first two categories.
Lastly, understand their approach. Are they trying to sell you a product, or are they trying to work with you and your families goals? Selling a product only helps one person, the person selling the product. Understanding your financial or retirement plan first is crucial, then you can put the tools or products in place to help you achieve those goals. You can find out right away by looking at their website and hopefully they have put down their process for you.
As more and more people are heading to the internet to find a financial advisor or retirement planner, the SEC is always reviewing the options. They have already made things a little more lenient, but don’t plan on seeing any big changes anytime soon. They make these decisions to protect you, the consumer. For the meantime, do your research thoroughly. After all, this is your money we are talking about!
Hi Vince Oldre, thanks for watching another video.
I want to answer a question that a lot of you have, and that is, you always wonder why it’s hard to find reviews on financial advisors or retirement advisors? The reason is that The Securities Exchange Commission, the SEC, who oversees financial advisors won’t allow for testimonials and they view reviews online as testimonials. The testimonial rule that The Securities Exchange Commission came up with won’t allow us to have those reviews out there. Now if it’s with a third-party site like Google or Yelp it becomes a little grayer. Technically we can have the reviews on Google and other third-party sites, as long as we cannot take them down. That is the biggest issue.
The other issue is we cannot ask you to leave a review for us. The SEC feels that if we have reviews, or if we ask for reviews or testimonials on our website we might skew what people might really think of us. Now think about it, have you ever seen a bad review or a bad testimonial on someone’s website? I’ve never seen a bad testimonial website. I’ve seen some bad reviews on third party websites, but for the people that ask you to keep posting or to keep putting a review, they generally have decent reviews. So it’s really hard to get a good accurate sense of how they really are. So, I kind of agree with the SEC in this place, but it does make it difficult for you as the consumer to find a reputable financial advisor.
Now you might find some other people that call themselves financial advisors with some reviews or testimonials on their website. If that’s the case, they are technically not a financial advisor. They are typically an insurance agent that are selling life insurance, long term care or annuities. Now technically they’re not supposed to call themselves a financial advisor but sometimes they just forget that they’re not supposed to do that. For us to call ourselves a financial advisor, we have to adhere to those rules where we cannot have testimonials on our website or have reviews.
Now as you’re trying to search for a financial advisor to work with and you realize that you can’t really have a lot of reviews or look for the reviews, it’s kind of hard to find out who is a good financial advisor. So I’ll give you a few ways you can do that. Now one, the financial industry works a lot with the referral business. Now if you do not want to ask your friends about who they may work with because you want to keep your finances separate. If you want to keep your finances separate, I don’t disagree with you there. What I will tell you though is your friends typically will be working with someone or has worked with someone for a long time, and they might be the best fit for you, because if your friends like someone typically you will as well.
Now there are some things you can do if you don’t want to ask your friends. Number one is going to the CFP.net site. It stands for Certified Financial Planner. If you go to the CFP.net website you can search for all certified financial planners, so you know you will be working with a financial planner that has a fiduciary duty.
The next thing to look for is an independent advisor. An independent advisor can work with all tools and vehicles that are out there. They do not have quotas with one company.
The next thing is to look at their website, are they staying in touch with the industry? Or are they just leaving or about to leave the industry? You also want to work with one that’s going to be with you for the rest of your retirement, not retire at the same time you’re going to retire.
I know just by adding all three of those things it’s not going to give you the best person to work for all the time. However, I think it’s a good start.
Another thing you can do is making sure that they’re also featured in some articles because then the industry sees them as someone that is highly valued in the financial industry.
If you have any questions when it comes to finding your own financial advisor or retirement planner, or having a hard time finding some reviews and we’re not in your area. Please feel to give us a call, and we’ll make sure we can help you, and I can do some research for you as well.
Until then, I appreciate you watching our video, and we’ll see you next time.