Tips for Screening Senior Specialists

So you’ve done some research, and it’s still not clear whether the senior specialist’s title indicates legitimate expertise, is a marketing tool, or something in between. FINRA, NASAA, and the SEC offer lots of detailed tips at their sites for how to get beyond the acronyms and initialisms. Here are a few:

• A good financial professional will welcome questions, so ask like crazy. Does this investment match my goals? How will it make money? How long has your firm been in business? What’s your investment philosophy? How often will I get statements? The SEC has lots of suggestions for questions that you should ask.
• Go back to FINRA’s “Understanding Professional Designations” site, click on the drop-down menu that says “Please Select a Record,” and choose a title. Note who the “Issuing Organization” is, then go to that Web site and contact the organization to see if the investment professional is authorized to use the designation and whether that person has been disciplined. Again, the criteria used by these organizations vary greatly: some require formal certification procedures that include examinations and continuing professional education credits; others may merely signify that membership dues have been paid.
• Brokers, investment advisers, and their firms are required to be licensed or registered by state securities regulators and to make important information public. Make sure that they are and that they have not had run-ins with regulators or complaints from other investors. If you do business with an unregistered securities broker or a firm that later goes out of business, there may be no way for you to recover your money. The SEC’s Central Registration Depository contains information about most brokers, their representatives, and the firms they work for. You’ll also find information about the brokers’ educational backgrounds and job history. Also see the SEC’s Investment Adviser Public Disclosure site.
• Understand how you will pay the investment professional for services rendered. They’re typically paid in one (or more than one) of the following ways: an hourly fee, a flat fee, a commission on the investment products they sell you, a percentage of the value of the assets they manage for you, or a combination of fees and commissions. Sometimes investments professionals and their firms receive additional compensation for selling a particular investment product, so ask about that as well.

The SEC also has a publication titled A Guide for Seniors: Protect Yourself Against Investment Fraud.