Is your "advisor" really independent?

I’ve made no secret of the fact that I hate the term “financial advisor.”  It has no real meaning and anyone may call himself that.  Most of the folks who call themselves financial advisors are salespeople.  I don’t say this as a slight to salespeople – I’m just not comfortable with what I consider a misleading title.  If you are a salesperson just say so, that’s all.

In a similar light, there’s been an explosion of folks who claim to be “independent financial advisors.”  What that actually means is not necessarily the same thing as what it may appear that it means.  And, again, the problem isn’t necessarily the affiliation structure that’s in place but rather the level of disclosure and potential confusion on the part of consumers that may go along with it. had an article about one of the biggest and fastest-growing brokers in the country, LPL Financial.  They’ve got over 12,000 advisors affiliated with them.  Here’s a link to the story in question:

In a sidebar on that article, SmartMoney pointed out three questions you should ask any advisor with whom you are considering working:

They are:

  •   How do you get paid?
  •   Are you a fiduciary?
  •   Who is behind you?

They’re good questions.  In fact, you should probably be asking these questions to more than just financial advisors.

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