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The KYA checklist

10 questions to ask before you hire a financial advisor.

Advisors run "know your customer" checks on every new client. These are the questions to run on them. Each one says where an AdvisorClear report answers it.

  1. Are they registered, and where?Anyone giving investment advice for a fee must be registered with the SEC or their state. No registration is a dealbreaker.In your report: Registration status and every state they can work in.
  2. Is there anything on their record?Customer complaints, regulatory fines, firings and bankruptcies all have to be disclosed. Most advisors have none, so any entry deserves a question.In your report: Every disclosure, explained in plain English.
  3. Are they a fiduciary all of the time?A fiduciary must put your interests first. Some advisors are fiduciaries only for part of what they do, and act as salespeople for the rest.In your report: Whether they are registered as an adviser, a broker, or both.
  4. How exactly do they get paid?Fee-only, fee-based and commission sound alike but create very different incentives. Ask for it in writing.In your report: The firm's compensation, from its own Form ADV.
  5. What will you pay in total each year?Add the advisory fee, fund expenses and any account fees. 1% a year can cost six figures over a career.In your report: The fee schedule, run on your own numbers.
  6. Do they also sell insurance or annuities?Commissions on insurance products can be large. It is not wrong, but you should know when advice comes with a sale attached.In your report: Insurance sales and affiliates, flagged.
  7. Who owns the firm?Private equity owners and parent companies can change fees, products and staff. Ownership tells you who the firm ultimately answers to.In your report: Every owner of 5% or more, and the companies behind them.
  8. Who actually holds your money?Your assets should sit with an independent custodian in your name, not with the advisor. Ask which custodian, and check statements come from them.In your report: Whether the firm has custody of client assets.
  9. Which licenses and designations are real?Exams like the Series 65 are required; letters like CFP are earned separately. Some designations take a weekend course.In your report: Active licenses explained, plus links to verify designations.
  10. How long have they been doing this, and where?Frequent moves between firms can be normal, or a pattern. Look at the dates and ask about gaps.In your report: Their full career history, firm by firm.

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