How to determine the ethics of your investment advisor

One of the most important aspects of your relationship with your investment advisor will be his or her ethics. Sadly, the news is filled with stories of investors who were taken in by unscrupulous investment advisors. Because of this it is of paramount importance that you take the time to do your research and ask the right questions, to determine if the investment advisor you are considering hiring is ethical and professional. While there is no magic question that will completely protect you from a dishonest investment advisor, by doing your research you are much more likely to find someone who is honest, ethical and professional, and most of all interested in helping you achieve your financial goals. Here is what you need to know about how to determine the ethics of your investment advisor-

When you are interviewing any prospective investment advisor, it is crucial that you ask questions concerning his or her integrity, background, discipline or legal problems. Many times people shy away from this because they feel it is intrusive and even rude. It is important to keep in mind that an honest and ethical investment advisor will have no problem answering these questions, and you will learn a lot of information quickly, if you are asking someone who does not want to answer them. Here are some questions to ask any prospective investment advisor to help you determine how ethical they are-
1. Are you committed to a particular standard of ethical and professional conduct? If so, what is that standard?
2. Has a governmental, public or private regulatory organization ever cited or disciplined you in any way?
3. Has any organization that you have been or are currently affiliated with been caused to discipline or cite you?
4. Have you ever lost a certification or license? If so, why?
5. Has a former client ever sued you in regards to your investment services? If so how was the lawsuit resolved?
6. Have you ever been convicted of any legal offense? Was this offense associated in any way with investment advising or any aspect of financial planning?
After you have gathered this information, (along with personal information and professional experience), it becomes time to do some research on your own. You should check out any information that you have been given. Keep in mind that there is no reason to make a hasty decision that you are not sure of. If an investment advisor is pressuring you into making a decision, this is a red flag, and you should move on to consider hiring someone else. Once you have checked out all of the facts that you have been given, then you should move on to consider the following factors, no matter how valid the information turns out to be.
1. Do you trust his person, in a rational manner, to give you the best advice about your investing strategies? If you feel hesitant you should consider the reasons carefully why you feel this way.
2. Do you believe that you have chosen the most qualified person available to help you meet your investing goals? The bottom line is that if you don't feel this way you should keep looking.
3. Are you comfortable with the way that this person interacts with you? Remember that you are looking to have a long term business relationship with this person, so you should feel comfortable doing so.
4. Does the prospective investment advisor explain things to you in a way that you easily understand?
5. Do you feel that the investment advisor has something valuable they can teach you through your interaction with them?