Understand how investing works for yourself
You need a freshman's understanding of investing and how the industry works. Fortunately this isn't hard at all: John Bogle's book "Common Sense on Mutual Funds" is a great place to start.
You need that so you have enough intuition to recognize poppycock when you see it. We're not asking you to get an MBA.
I myself got a crash course in investing when I entered a Board of Directors who held a very substantial endowment. How endowments work melted my brain, and made me realize it's actually pretty simple to succeed; the opaque and seemingly complex financial world is mostly smoke and mirrors.
Most financial advisors are there to rip you off
And what I mean is, most financial advisors that you'll find. Because they are the ones working to throw themselves into your path: with adverts, search engine marketing, well-lit retail locations, etc.
The way they work is they either give free advice, or take your money for advice; and then they "recommend you" into financial products which kick them back a substantial sales commission.
Often, these products are mind-numbingly complex. And that's quite on purpose; it allows them to obfuscate the ways that they are increasing internal costs of the product.
5% is not uncommon, so they see your $300,000 as a $15,000 payday for themselves. This comes out of your end; your investments lose that money on day one, either as a front-end sales load, early withdrawal penalty, or hidden fees. If you committed, and then cashed out a month later, you would be down about 5% when all the dust settled. This is completely unnecessary. There is no reason for investments to carry this kind of burden.
There are also outright fraudsters out there. Very smart people fell for Ponzi and Madoff's schemes; and my own network of friends has been ravaged by a swindler.
Even being a "fiduciary" is not a perfect defense
A fiduciary is supposed to act in your best interests.
But a salesman can claim to be a fiduciary simply by claiming to follow gold-standard practices within that industry: For instance arguing that all the major top-tier investments work the exact same way. Depending on how you define "major" and "top-tier", and if you pretend discount brokerages and funds like VTI are not legitimate. "No one in the industry recommends those funds" (circular reasoning; because there is no commission on them).
I once talked to an advisor, and I said "Well, I'm looking for a "fee-based advisor", and the advisor said "Then pay me, also!" A veritable Henny Youngman joke, but it happened to me for real. I got wise when the product recommendations were exactly the same lame-dog products, but the class C (no load, high expense ratio) shares instead of class A (front end load) shares. (you don't want any of these).
End of the day, the guy was a fund/annuity salesman, who didn't know any other tricks... actually thought that "being a fiduciary" was as easy as waiving sales commissions... This kind of ignorance is insidious within the industry.
A person who normally lives on commission, only has in their field of vision products which pay commission, and is simply unaware of discount products like VTI that do not pay commissions in any variation, but are the best value for consumers by far.
You want a fee-only advisor, who only does business that way.
And doesn't sell anything on commission. That opens the advisor's mind to products beyond the field of vision of a regular advisor. For that person, VTI for instance will be an everyday staple.
A real shocker when dealing with fee-only advisors will be their office. Mine is in a well-lit mall, open-plan with small tables, and you can smell baked goods. They have 2 baristas on staff and makes a wicked Frontega Chicken sandwich. Yeah. We meet at Panera Bread.
By the way, my advisor doesn't have the password to my Vanguard account: that would be insane since "don't share passwords" is the keystone to security. Also, I do not give my money to the advisor. All my money stays in my brokerage account: I do the buys and sells, all I get from the advisor is what to buy and when.
That's the difference between an advisor and a broker.
Some consumers (and all brokers!) are fetishistic about that ritual where you hand the advisor the biggest check you've ever written in your life, as if it were some sort of frickin' Tony Robbins trust exercise or something. And you know what? People go along with it, because big investing is new to them, and they think the advisor relationship requires deep trust like that, which it doesn't... so they ignore the little voice telling how insane that is.
And then, you get smacked. The simple fact is, it's not within your skill to distinguish a genuine broker who will only steal 5% commission from a slick Ponzi type who will steal it all. The people who fell into Ponzi's and Bernie Madoff's schemes, were smart people. Dozens of my friends got roped into such a scheme from a trusted friend. Those guys are everywhere. Ergo: No cash. No passwords. Don't need em.
And from my endowment experience I know that if it's not directly purchasable in my Vanguard account, I don't need it.
How can my advisor burn me? By telling me to buy the wrong thing on the open market, but that's very little possible damage. My volume is too low even for a pump-n-dump scheme to work, not that I would trust advice to go all-in on a single stock!
Expect a couple thousand dollars of counseling fees, but at the end of the day, it doesn't matter so much whether your investment is $30,000 or $300,000. An advisor who is bored by $30,000 and excited by $300,000 may not have your interests at heart.
