As an intelligent and savvy investor, you understand the importance of doing your due diligence before entrusting your hard-earned money to anyone. You wouldn’t buy a car without test driving it first, or hire a babysitter without checking their references, so why would you choose a financial advisor without thoroughly researching their qualifications and experience? That’s where financial advisor ratings come in.

Existing ratings of financial advisors provide valuable information about an advisor’s background, qualifications, and any disciplinary history, so they help you make an informed decision about whether a particular financial advisor is the right fit for you.

Rating an advisor you’ve worked with based on the experience you’ve had with them is an important step in the process as well. It not only adds more data to help future prospective clients make better decisions, but it also holds advisors accountable and can help encourage better, more ethical behavior on their part going forward. Plus, if you really like your advisor, rating them well can help them drum up more business.

Stick around for a complete guide on how to use existing advisor ratings to maximize your investment experience, and how to leave ratings that will hold advisors accountable, celebrate excellent advisors’ work, and help future investors get the best service possible.

Step 1: Gather the Goods

Gathering data on a financial advisor’s history does require a bit of homework on the front end. First, find all the information you can about the financial advisor in question. This may include their name, the firm they work for, and any relevant licenses or certifications they hold.

Next, visit FINRA’s BrokerCheck or the Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) database and search for the financial advisor using their name or the firm they work for. These databases provide a wealth of information, including the financial advisor’s employment history, any disciplinary actions they have faced, and any customer complaints or arbitration proceedings they have been involved in.

There are also other third party sites, like Rate My Advisor, that collect ratings on financial advisors for others to peruse before making decisions about who to hire. Such sites are a great resource for getting anecdotal information about others’ experiences with advisors, which can be super helpful in determining if a particular professional is the kind of person you can see yourself working well with.

Step 2: Read Between the Lines

Now that you’ve got all the information you need, it’s time to start digging into the details. Look for any red flags that may indicate that the financial advisor is not a good fit for you. Here are a few things to watch out for:

  • Disciplinary actions: 

If the financial advisor has faced any disciplinary actions, such as fines or suspension, be sure to read the details carefully. These actions may be related to violations of industry regulations or ethical standards, and may raise concerns about the financial advisor’s trustworthiness and integrity.

Just because a professional has a disciplinary action on their record, doesn’t necessarily mean you shouldn’t hire them, but it’s good information to have at the outset. You can also ask them about particular flags you noticed and use their response to gauge if you think it might be an issue in your specific situation or not.

You might also consider that some people are unreasonable, and ratings left on the internet are some of the most biased pieces of writing in existence. Singular negative (or positive) reviews shouldn’t totally guide your decision making; instead, check for repeated patterns or consistencies across multiple ratings from multiple periods of a professional’s career. Those you can probably bank on being accurate. 

  • Customer complaints: 

If the financial advisor has a high number of customer complaints, this should stand out as a pretty serious red flag. One or two bad interactions are almost inevitable, but if there is a consistent pattern of complaints against a financial professional, that might mean they’re not a great person to work with.

Be sure to read the details of the complaints to get a better understanding of the issues that led to the complaints and whether they are indicative of a larger pattern of problematic behavior. Again, if you can always ask the advisor about patterns like this to see what they say. You might even get a discount on your rate if they’re in need of business and looking to build up a reputation after a couple of negative interactions. 

  • Employment history: 

People change jobs all the time, so just because a financial professional has worked for a few companies over the course of their career, does not necessarily mean they don’t provide excellent service.

If, however, the financial advisor has had multiple short-term jobs in a small window of time, this may be a sign of instability or inconsistency. Be sure to look for any gaps in employment or frequent job changes, as these may raise questions about the financial advisor’s dedication and commitment to their clients.

  • Specializations and certifications: 

Some financial advisors may specialize in certain areas, such as retirement planning or estate planning, and may hold additional certifications or designations in those areas. While these specializations and certifications can be valuable, it’s important to make sure that they are relevant to your needs and that the financial advisor has the necessary experience and expertise to provide the services you require.

Some professionals charge higher rates because they have specializations; if you don’t need those services, you may end up paying more money for no reason. On the other hand, if you think you might need such services in the future, it might be worth it to establish a relationship with an advisor you trust now, so you know you have access to them when the time comes.

When looking at reviews of financial professionals, it’s important to consider when the reviews were written. People change, and advisors move from institution to institution, like hermit crabs swapping shells.

Poor ratings early in an advisor’s career might have more to do with the company they were working for than their abilities as an advisor (or vice versa). If you notice odd patterns like this, feel free to ask the advisor about them. If it was an issue with an employer rather than some personal flaw, they’ll probably tell you about it.

You should also always value more recent ratings higher than older ones. Just because someone was amazing 10 years ago, does not mean that’s still the case (Don’t believe me? Look at what happened to Kanye).

Step 3: Get a Second Opinion

If you’re still on the fence after reviewing the financial advisor’s rating, it may be helpful to get a second opinion from a trusted source. This could be a lawyer, or even a trusted friend or family member who has experience with financial advisors. A fresh perspective can help you see things in a new light and make a more informed decision.

It is worth noting, however, that if something in an advisor’s bio or ratings is giving you pause, it may be worth erring on the side of caution (see below).

Step 4: Trust Your Gut

At the end of the day, the most important factor in rating a financial advisor is your own gut feeling. If something doesn’t feel right, trust your instincts and keep looking. There are plenty of financial advisors out there, and it’s important to find one that you feel comfortable with and trust to manage your money.

The job of a financial advisor or planner requires you to invest quite a lot of trust in them — they are making decisions that will significantly affect your life down the line after all. If something’s rubbing you the wrong way, even if you just don’t like their personality all that much, it’s probably worth looking elsewhere.

Step 5: Add Your Rating

The whole system we’ve outlined here is dependent on folks taking the time to review their financial advisors after engaging with them for some time. So, once you’ve interacted with your advisor, make sure to add your rating on Rate My Advisor and other sites.

Things change all the time: advisors learn from previous experiences, change companies, move to different states, and undergo major life events. An advisor who had a rocky start to their career might have learned from initial mistakes and be the perfect fit for you now. In the same way, an advisor who used to be excellent might have decided to start phoning it in for whatever reason, and may no longer be providing the excellent service they once did.

Because things change, it’s important for people to keep ratings up-to-date so that prospective clients have the best, most accurate information on the professionals they’re planning to hire. Your providing an honest, accurate rating based on your experience with a financial professional could help lead others to a someone who suits their needs, or steer people away from an advisor whose existing ratings simply don’t accurately represent the services they currently provide.

TLDR

Before hiring anyone you should always check a financial professional’s ratings on Broker Check, IAPD, or Rate My Advisor.

Gather information on their employment history, disciplinary actions on their record, and any customer complaints; this will help make sure you don’t hire someone who will not provide you with the quality of service you need.

When looking at advisors’ reviews, consider when the reviews were submitted. People and circumstances change, and old reviews may not accurately reflect an advisor’s current abilities.

Make sure to review the advisors you interact with honestly and accurately, whether they provided you with excellent or terrible service (or something in between). Your experience will be helpful information for others who are seeking financial advice, and you could either help an excellent advisor get more business, or prevent a terrible advisor from taking advantage of more people.