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1.  Trust but verify – Your advisor should never take direct possession of your funds.  Make your deposits directly with the custodian.  Withdrawals should also come direct to you from the custodian - never through the advisor.  Verify the investments the advisor is making are in assets that are publicly traded so you can obtain a valuation independently.  You should be getting statements directly from the custodian that can be checked against the reports you get from your advisor.

2.  If it’s too good to be true, it probably is – Nobody’s investment strategy works 100% of the time in any market.  You can’t position a portfolio to be in the right place when the market goes up and when the market goes down. 

3.  Don’t rely on references, do your own investigation – Most of the people that hired Bernie Madoff relied on referrals from friends.  A referral will generally tell you how much they LIKE an advisor but do little to tell you whether the advisor is competent and has integrity. Ask for the advisor’s ADV II which must disclose how they are paid and potential conflicts of interest.  Check the regulators websites for complaints through FINRA.org and SEC.gov. 

4.  Look for a fiduciary relationship - In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.  Most advisors are sales people who work for their employer to sell products.  They earn their living my selling you products for a commission.  Placing your confidence in another person to manage your finances requires the services of a Registered Investment Adviser (RIA) who is a fiduciary.  An RIA is paid by his client, not from the investments they recommend.  A good place to find a fiduciary is NAPFA.org.

5.  Review your statements, every month - pay special attention to account withdrawals.  If there is a withdrawal from your account that you didn’t initiate, get it resolved immediately.