A Wall Street Journal reporter contacted the Better Business Bureau this week, researching a story about the "alphabet soup" of certifications in the financial planning industry.  There are literally dozens of credentials that may be claimed by advisors in this industry.  Most certifications are legitimate, but these certifications vary greatly in how difficult they are to obtain and maintain. Some are totally bogus, involving little more than a payment.

Most financial advisors are legitimate and honest.  But because a financial planner is "certified" or "chartered" (or BBB Accredited, for that matter) doesn't mean the planner will provide the impartial expert advice that you need to help manage your money. It's important for you to understand what the certification means and what expertise and training it requires.

There are other important questions to ask and things you need to know to help you avoid choosing someone who might be a small-time (or "big time") Bernie Madoff.

Know how the financial planner is compensated.  Many offer "free advice," which means they are paid through sales commissions.  Others require a fee paid by the investor.  Keep in mind that there is "no free lunch." The consultant who invites you to a free lunch or dinner, or doesn't charge you a fee for service, is usually being paid by a company whose product the advisor is selling.
 
You must be your own financial advisor -- especially when it comes to choosing a financial advisor.  Do research and choose carefully.  To avoid scams:

• Be cautious about choosing an advisor who wants to be your friend.  A great personality doesn't mean that a person will be a bad financial advisor, but neither does it make that person a good investment advisor.  Sometimes the most unscrupulous financial advisors are the ones who work hardest at becoming your friend.
• Exercise healthy skepticism, especially if an advisor promises high returns with low risk.  Higher returns always involve higher risks. Anyone telling you otherwise wants to sell you "a bill of goods" that will be less than promised.
• Check out any advisor you are considering with four regulatory agencies, to verify proper licensing and to look for past disciplinary action involving the advisor:
• www.finra.org-- the Financial Industry Regulatory Authority
• www.sec.gov-- the Securities and Exchange Commission
• Your state's securities commissioner:
• Kentucky: kfi.ky.gov, the Kentucky Department of Financial Institutions
• Indiana: www.in.gov/sos/securities/, the Indiana Securities Division
• Your state's insurance commissioner:
• Kentucky: insurance.ky.gov, the Kentucky Department of Insurance
• Indiana: www.in.gov/idoi/, the Indiana Department of Insurance

Finally, the U. S. Securities and Exchange Commission has established a new website, www.investor.gov, with links to an abundance of information and tools to help you manage your money carefully and avoid many to the traps that exist in the marktetplace.