Finding the Right Person to Provide Advice

Liisa Ecola has had the same broker for 15 years.

She stayed with him even after he moved to Michigan, and she remained a District resident. She stayed with him after she got married, and urged her husband to use him as well. In fact, she let him act as her financial planner, making more than the typical investment decisions brokers make.

But now that her broker is moving to yet another firm in Michigan, she is wondering if it is time to cut ties. Should her broker also be her financial planner? she asked. Is there any risk to keeping all her investments under one roof?

"I don't know if I'm being naive about having all my advice coming from one person," said the 40-year-old transportation researcher for the Rand Corp.

Ecola has a lot more financial needs now than when she first hired her broker. She'd like to learn more about her long-term-care insurance options. Her husband recently switched jobs and rolled his 401(k) into an IRA. So she'd like to discuss investment options. And she would like tax advice.

It's not easy deciding whom to trust with your money. In this day and age, when so many people are confused about what to do with their finances, it's especially important to find the right person. And there are many people out there with many letters after their names offering all sorts of financial advice.

"It's a jungle out there," said Linda S. Dalby, a partner in the Individual Clients Department of Day Pitney law firm in Boston.

Dalby said Ecola is not necessarily wrong in staying with her broker even though he's moved to another city. "Because of the importance of trust and responsiveness in the investment advisory relationship, you should not end it solely because of another move," she said. "Much business is now conducted by e-mail, fax and phone, and distance is not the barrier that it once was."

Dalby pointed out that although brokers typically act as intermediaries in the purchase of securities, some are now capable of providing financial planning services.

Indeed, Ecola said her broker recently was credentialed as a certified financial planner.

Still, Dalby cautioned that there can be an inherent conflict of interest in the dual role of a broker/financial planner. "A broker is not working for you, but rather for the company that employs him or her," she said.

Eric Bailey, managing partner of CapTrust Advisors in Tampa, agrees. "A broker can also be a financial planner, and many of them are today," he said. "Just make sure the objectivity and independence is inherent in how they are compensated and the advice they give."