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Get Wise to Your Advisor: How to Reach Your Investment Goals Without Getting Ripped Off by Steven D. Lockshin

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Chapter 8

Choosing an Advisor: Know What You Don’t Know

Identifying and selecting your financial advisor is almost as important as selecting your surgeon (remember Chapter 1?). Unfortunately, as I’ve repeatedly pointed out, when it comes to evaluating an advisor, most of us don’t know what we don’t know. How well you interview the key professionals in your life can certainly dictate the quality of the outcome. But how can you tell a good attorney from a mediocre attorney or, for that matter, a good investment advisor from a bad one?

At the very least, lawyers and physicians can initially be screened by the quality of their schooling. Did they go to Harvard for medical or law school, or did they graduate from a correspondence school? Medical and legal professionals also have annual continuing education requirements and state licensing. None of this guarantees that you’ll hire the best lawyer or doctor, but it’s definitely a good start.

Unfortunately, as we learned in Chapter 5, the barrier to entry into the wealth advisory profession is negligible, at best. There is no formal curriculum or degree that signifies expertise and/or professionalism. Pass a test, hang a shingle, and you’re in business. Just add water and poof—you’re an instant financial advisor. Clearly, this isn’t the state of the entire industry. There are certain individuals from every segment of the financial advisory business who are capable of serving your needs. However, until the industry raises the bar of competence, ...

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