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Investment Advisers

First, let us be clear about what an investment adviser is. If someone gives you advice on investing in securities instruments, and gets paid for it, that is an investment advisor. The U.S. Securities and Exchange Commission (SEC) and state regulators generally require that investment advisers be licensed and registered. If an investment advisor manages $25 million or more they must register with the SEC. If they manage less than that, they will likely have to register with the securities regulators in their own state. And, if a larger investment firm employs representatives, those representatives will likely have to register with their respective states.

A registered investment advisor will have what is called a form ADV on file with the SEC. This form has two parts; one which has a record of any regulatory difficulties and serious complaints from clients, the other part discloses the advisers fees and investment strategies. The most current form ADV for your prospective investment adviser can be found online at the SEC Investment Advisor Public Disclosure (IAPD) website: www.adviserinfo.sec.gov.

This is all vital information to help inform your decision about the investment advisor you select. The best way to understand what you can learn from all this is to see if you can answer the following questions. If the information that you are after is not on the form ADV then you will want the adviser to answer the questions for you.

Here are some basic questions:

- Is your investment adviser registered with the SEC?

- Are they registered with the Financial Industry Regulatory Authority (FINRA) or with your state?

- What kind of experience does the adviser have investing for people in your particular situation?

- What licenses do they have?

- Where did they go to school, and what kind of education do they have?

- What kind of employment history do they have?

- Will your investments be protected by the Securities Investor Protection Corporation (SIPC)?

- What products and services are available to you through this investment advisor?

- What is their fee structure?

- Have they ever been sued by a client or disciplined by regulators?

- Finally, be sure to ask them for a copy of both parts of their form ADV if they are registered with the SEC.

Once you have this information at hand it will be easier for you to make an informed choice about which investment advisor is the right one for you.