Obviously you know to never trust your money to a firm (or anybody from a firm) called Dewie Cheatum and Howe. Beyond that, though, how can you be sure that your money is truly safe…you know, outside of stashing it in a shoebox under your bed or in your mattress?
Banks
1. Is Your Bank Safe?
The best place to start with you want to figure out whether or not your bank and its assets are truly safe is to check out the bank with the FDIC. They have a website that you can use to check out how the bank has been performing financially. You can also search the Federal Reserve to see if they have ever had to send enforcements to the bank you’re thinking of working with.
You can also check out your bank using the Bank Rate Safe and Sound Rating System and the Bauer Financial rating system(this one requires you to pay for a detailed evaluation, but you can check out the basic ratings for free).
2. Check Your Bank’s Background
Start with the basics. Plug your bank’s name into Google and see what comes up.
Why aren’t you starting with the bank or credit union’s website? Simply put, because those sites are meant to make the bank as attractive as possible to potential customers. When you want to find out the truth about a bank, you need to find independent reviews and testimonials and articles. These are not going to be found on the bank’s official website.
When you read these reviews and articles and testimonials, pay attention to a few things:
• What do they have to say about customer service?
• What do they have to say about the level of satisfaction they have with the types of accounts they’ve opened?
• What do they have to say about the bank’s ability to offer what you need and want? Are they super strict, or is there some flexibility?
3. Pay a Visit to the Bank
Before you agree to any sort of account, pay a visit to your local bank branch. How do you feel when you walk in? Do you feel safe? Do the employees seem happy? How well is the space kept up? Are the guards on hand? How many employees are working at a time?
Meet with one of their personal bankers and talk about your options. Does the person you meet with know his product, or does he have to look up the details of everything on his computer? Do you feel pressured to sign up for an account? Is he trying to push additional products on you? Does he actually look at you? Do you feel like he appreciates meeting with you, or do you feel like he wants to get you set up and get you out of there?
Financial Planners and Investment Advisors
Banks are not the only places where you might keep your money. You might also want to invest it. This is where having a good financial planner and investment broker on your side can be quite helpful.
Of course, just like with your bank, you want to do your research before trusting anybody with your money and your financial stability. So how do you protect yourself? How do you make sure that the person you’re working with is trustworthy and will keep your money safe?
1. Go Social
Talk to friends and family members who have invested their money. Ask them about their experiences. Ask them about the people they worked with.
This is the best place to start getting referrals and recommendations. Your friends know you. They know how you are with your money and what sort of investments you’re likely to make. They understand your personality and will be able to tell you whether or not you’d be a good fit with the people with whom they are working.
2. Do a Background Check
Just like with your bank, start with Google. What does Google tell you about the investment broker or financial planner you’re thinking of hiring? Don’t just check the firm. Check the person. This is especially important if you are going to be working with an independent advisor.
It’s important to understand that who someone is personally is not necessarily who they are professionally (as you most likely already know from your own experiences). At the same time, it is okay to find out what kind of person your planner and broker is when she isn’t at work. You especially want to know if she has a criminal record or any sort of fraud in her background.
3. Meet with the Person
Much like your bank, this is as much for your gut feeling as anything else. How do you feel when you meet with your potential broker or financial planner? Do you feel comfortable talking to him? Do you feel like he sees you as a whole person and not just a potential commission? Do you understand everything he says?
Most importantly: Do you feel like you know just as much if not more than he does?
This is a double-edged sword. On the one hand, you don’t want to work with someone whose basic knowledge of investing is shallower than yours. On the other, you want to be able to follow the conversation and understand what he wants to do what your money well enough to have a solid opinion on it—you don’t want to have to put blind faith in his abilities to help you choose wise investments.
If you really want to make sure your money is safe (and who doesn’t in this economy), you need to do your research. Don’t simply walk into the nearest brand-name bank with your latest paycheck and assume everything will be fine. Actually take the time to learn about and visit the different banks, credit unions, and especially investment and financial planning professionals in your area.
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Erin Steiner is a freelance writer and blogger from Portland, Oregon, who writes about a variety of topics for a number of websites such as Reputation.com.