There’s no more important and potentially dangerous financial undertaking than investing for retirement. But Americans who are unwilling or unable to manage their own retirement investments are placing a tremendous amount of trust in another person to handle their hard-earned money and help ensure their future happiness.

Wall Street hasn’t always had the best reputation for playing by the rules and treating the average investor with fairness and respect. Many Americans were reminded of this nefarious reputation when a handful of big banks and asset managers nearly collapsed the entire U.S. economy in 2008 by speculating in the mortgage bond market.

Most people who are seeking a financial advisor are doing so because they aren’t experts when it comes to investing. But that inexperience also makes it difficult to know when a financial advisor has your best interest in mind and when he or she may be leading you astray.

Unfortunately, there’s no sure-fire way to smoke out every crooked banker or identify every incompetent broker. But if you’re looking for help with investing and don’t know where to start, there are at several major red flags to avoid.

The fiduciary rule. First, it’s important to know that all Americans seeking retirement investing advice from financial advisors are better off today than they were a year ago thanks to the new Department of Labor fiduciary rule. As of June 9, all financial professionals handling retirement accounts were required by law to act in the best interest of their clients.

It may come as a shock to some investors that this fiduciary standard is a new rule. Prior to June 9, brokers and certain other financial professionals were only required to make recommendations that were deemed “suitable” given the client’s situation. This suitability standard often led to conflicts of interest in which brokers could earn more commission fees by recommending suboptimal products.

But just because retirement accounts are now protected by the fiduciary standard doesn’t mean there aren’t still dangerous advisors out there. According to Dennis Dick, proprietary trader and market structure analyst at Bright Trading, pushy and overconfident behavior is a major red flag.

“It’s very difficult to consistently outperform the indices,” Dick says. “If they are bragging about their great trades, you can be fairly certain that they also have some bad ones they aren’t telling you about.”

He also says any advisor who is pushing for a portfolio concentrated in one specific type of investment or one particular sector of the stock market may leave you vulnerable in the event of a market downturn.

“Anyone can perform well when the market is going up, but being properly diversified will better protect you for the inevitable downturns,” Dick says.

Garrison Urette, president of Garrison Asset Management, says investors should be wary when it feels as if they are talking to a salesman rather than an advisor. “Proprietary investments” can also be a major red flag.

“If an advisor talks about their exclusive investments or investment services, they are likely trying to lock you up and make it difficult/expensive to leave their firm,” Urette says. “I have seen countless clients that were sold annuities that locked them into a product for several years with onerous penalties to get out.”

Of course, the advisors who sold them the annuities collected fees the entire time.

Set the tone early. Owen Murray, director of investments for Horizon Advisors, says the very first conversation between a client and a potential advisor is important in setting the tone for the professional relationship.

“I would be wary of any advisor who begins a conversation by discussing investment or insurance products,” Murray says.

Instead, the first step in the process should involve the advisor listening to the needs and goals of the client. “A client’s investment or insurance needs should be determined as part of their overall financial plan, and not the other way around,” Murray says.

As in any other type of business, a long-term track record of success and positive third-party feedback are also important when choosing a financial advisor. Other satisfied customers are no guarantee, but positive online reviews or recommendations from friends and family who have been long-term clients are often good signs that you will be satisfied as a client.

Finally, the most important part of the advisor selection process is checking for any state or SEC rule violations. Advisors must disclose all violations from the past 10 years on SEC Form ADV, part 2A Section 9 and Part 2B Section 3. All advisors must…

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