Use the following eight steps when hiring a financial professional:

1. Identify your needs.
2. Determine the most appropriate professional to assist.
3. Create a list of potential candidates.
4. Develop a list of questions that must be answered before anyone is hired.
5. Interview the candidates.
6. Check references.
7. Research the professional's background.
8. Hire the most suitable professional.

How to Conduct a Financial Background Check

Contact appropriate authorities to confirm financial professionals being considered have a clean record. State agencies include the State Bar Association, State Board of Accountancy, State Insurance Commissioners, and State Securities Board.

Call the Securities Investor Protection Corporation, the company should be insured with them. Confirm that trust companies are bonded. Call the State Securities Board or the National Association of Securities Dealers (NASD) to find out if there are any disciplinary actions against the firm. Mutual fund companies should be members of the NASD as well.

Contact the Securities and Exchange Commission and State Securities Board to confirm an investment is registered for sale. Securities can be identified by serial numbers. When dealing with a financial professional of a smaller firm, call the fund company to ensure your account exists and your money is invested.

Remember, scam artists may not always promise the moon, but may offer yields that are a few percentage points more than you can find elsewhere.