http://www.cbsnews.com/8301-505144_162-57356132/choosing-a-financial-planner-5-red-flags/

A nice article from CBS’s MoneyWatch site.

Summary – Watch out for the following things (notes which follow the bullet points are my own):

• Variable Annuity pitch – sometimes these may be appropriate, but certainly they are not something anyone should suggest at a first meeting.  If they are suitable, they require a detailed analysis, a full understanding of the client of the commitment involved, the downsides, the costs — and the alternatives.
• Focus on Proprietary Funds – sometimes “advisors” recommend things which benefit their firm or themselves more than the client would benefit from alternatives.  Proprietary funds often fall into that category – there are often cheaper, better, more liquid options from third party providers.
• Target-Date Fund recommendations – this one’s a bit more controversial.  Many of us like these, but like most products, there are excellent versions and really poor versions.  And most target-date funds just aren’t very good – generally too expensive, or internal investment choices are too narrow (ie. one fund family), etc.  There are some great target date funds, but if your advisor recommends a target date fund, make sure you know exactly why.
• Silence on Fiduciary Duty – note that not all folks who call themselves “advisors” are held to a fiduciary standard.  If they are brokers or insurance agents, they are held to a “suitability” standard.  And some advisors are dual-registered as both brokers and as reps of a Registered Investment Advisor.  When they wear their RIA hat, they are held to the fiduciary standard and may say “you need to buy a stock fund” – then they secretly switch hats to their broker hat and say “And I recommend that you buy this particular one”.  Make sure that your advisor is *always* acting as a fiduciary when giving you advice.
• Compensation details – if you don’t get an explanation right up front of exactly how the advisor is getting paid to advise you, something’s wrong.  While many advisors (ie. members of NAPFA) will only work on a fee-only basis and therefore never get commissions, commissions aren’t necessarily the worst way to pay for advice.  Just make sure you know exactly what you’re paying and what you’re getting for the money.  And if they won’t tell you what they’re getting paid to advise you, take your business elsewhere.