The Questions to Ask–And the Answers You Want to Hear!

1. "How long have you been a broker?"
   Answer: You want a minimum of five years' experience
2. "What kind of products do you specialize in?"
   Answer: Here's one more reason you should know what kind of investments will work best for you. If your goal is to build a portfolio of individual bonds, you don't want a broker who specializes in mutual funds.
3. "Where do you get your financial advice?"
   Answer: This is a surprise question for most advisers and brokers. As a result, you'll probably get an unrehearsed and hopefully honest answer. You want to hear that he or she taps into a variety of resources, including professional publications, personal contacts in the industry, institutional research, and other material that would not be easily available to you. Otherwise, you might as well be making your own financial/investment decisions.
   
   And if he says the firm's investment research department is his source of stock recommendations, don't walk away, run! By now you must be aware, from all the exposés in the news, that equity research analysts are paid handsomely to recommend client companies and often fired if they issue negative findings.
4. "Are your transaction costs (commissions) and fees competitive with those of other similar firms?"
   Answer: Have the answer proven with real examples. Ask for a detailed list of all commissions for recommended products and non-recommended products.

And Watch Out for These Warning Signs

1. Gobbledygook. We don't care how good a track record an individual has. If you can't understand what he's trying to sell you, you're headed for trouble. If this professional can't adequately explain why a particular investment makes sense for you in less than two minutes, get out of Dodge!

2. A financial pro who wants to meet you at your home. Don't invite them in. Always go to the so-called "professional's" office. There are quite a few good reasons for this:

You can get up and walk out. People tend to act out of guilt, even if it isn't conscious: If you think, "Oh, we made the salesperson come all the way over here,"you might feel inhospitable pushing him or her out the door.

You can also see the environment in which your potential adviser works. Does it seem like a comfortable environment for your money? Does it look like the office of someone who is successful and knows what he or she is doing?

3.Solicitation by phone.It should go without saying–you don't want your money manager to pick you out of some phone list. Nothing makes the hairs on the back of our necks stand on end more than the person who calls people cold, announcing an important new "investment opportunity." Don't trust anyone who uses the word "opportunity" in connection with your money. This is the way most scams are sold. Hang up the phone!

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