How to find a financial advisor who protects investors

Federal regulators are once again trying to ensure that financial advisors prioritize the needs of investors when they recommend certain financial products or offer investment advice.

Currently, if you work with a financial advisor, he or she can recommend investments that are right for you. This may be suitable, but an appropriate option may not be the best financial choice for you. So why not recommend the best? Some advisors may benefit financially from the recommendation of a slightly more expensive investment.

This behavior is not illegal, but affects many Americans. About 43 million US households have a retirement or brokerage account, and research compiled by the Obama administration has estimated that this type of conflicting advice costs Americans $ 17 billion a year.

The US Securities and Exchange Commission – which oversees financial markets, investment companies and investors – wants to change that. The commissioners of the agency voted Wednesday at 3 votes to one to adopt new rules that would require, among other things, financial companies and financial services professionals to act in the best interests of their retail customers, placing the needs of investors before theirs.

"This action is long overdue," said SEC chairman Jay Clayton on Wednesday. The rules aim to "improve the quality and transparency" of relationships between investors and their financial advisers, he added.

But critics of the new rules say that they do not go far enough. SEC Commissioner Robert Jackson criticized the rule-making process as "unclear" and "weak combination of measures". "Rather than asking Wall Street to give priority to investors, the current rules maintain a confusing standard that exposes millions of Americans to the costs of contradictory advice," Jackson said.

Whether or not the rules work to protect investors as the SEC wishes, consumers can not relax and simply rely on the fact that their financial advisor always makes the best recommendations. You must ask questions, research your options and maybe even ask for a second opinion.

The new rules will come into effect this summer, but the SEC has put in place a transition period allowing companies to comply with the new standards until June 2020. In the meantime, if you want to work with a Financial advisor or if you want to change to a new one, here's where to find professionals who already put your needs first.

If you need financial advice, people ready to help you are not lacking. Last year, there were more than 300,000 financial advisors in the United States, according to the Cerulli Associates Industry Research Group.

To reduce it a bit, look for a professional not only competent, but also committed to putting your interests first. In other words, to act as trustee. The ad directories managed by the Garrett Planning Network or the XY Planning Network are also a good starting point.

Advisors from these organizations are committed to putting the interests of the investor at the forefront, and members work only for compensation. This means that you are paying your advisor on an ongoing basis for the advice that he provides and that he does not accept payments for the recommendation of specific products, which may result in conflict.

Both organizations also offer the option of hiring a financial planner who works on time if you are only looking for answers to specific questions.

The Institute of Fiduciary Standards also operates a registry of advisors composed of professionals who have adhered to organizational standards, including: serving the interests of clients, acting in good faith and with prudence, and controlling investment expenses .

You can also search for a certified financial planner or a CFP in your area. Holders of this designation possess a bachelor's degree and have pbaded a rigorous examination to verify that they understand all the fundamentals of financial planning. In addition, under the new rules that will come into effect in October, all persons benefiting from a PCP must act in the best interest of investors. The board of directors of the CFP, which certifies and supervises the holders of the designation, also has a powerful supervisory body that regulates all the rules of its members.

If you want help but you do not want to start an ongoing relationship with a financial advisor, consider working with a robo-advisor. These are programs, including Ellevest and Betterment, that use computer algorithms to invest your money for you at a risk level that you are comfortable with, but they do not allow for a great grip.

These are essentially digital transactions that will generate a diversified portfolio for you, purchase investments, and rebalance periodically to ensure you have the right mix of badets and financial goals. In addition, they are registered investment advisers and therefore have to put your interests first.

Robotics consultants work particularly well for investors who do not need a lot of complex needs and may not have much money to invest in yet.

When hiring a financial advisor, be sure to research before you sign up. For example, you can view the work history of financial advisors and find out if they have had any consumer complaints or regulatory issues through BrokerCheck. You can (and should) also consult the file of a financial company. Therefore, if you work with a robotics consultant, you can consult the entire company.

The PCP's board of directors also has a useful questionnaire that you can use to interview potential financial advisors. For example, you should ask how they are paid and what are the overall costs you can expect to pay for working with them.

At the end of the day, it also depends on those with whom you feel comfortable. Make sure your advisor not only prioritizes your needs, but also works in a way that makes sense to you and your financial goals.

Do not miss: Self-proclaimed Millionaire: This is the first way to get rich – and most young people do not

Do you like this story? Subscribe to CNBC Make It on YouTube!