If you're investing through a financial planner, broker or adviser, chances are they've failed you. It's difficult to find a genius in a bear market and even the best asset allocators can't do much when usually non-correlated investments all drop at the same time, as we've so far experienced in this market. Even the traditional gold and commodities hedges haven't worked perfectly this time around.  That everybody is losing money is cold comfort to investors who have to pay their advisers whether or not their investments appreciate. Marc Lowlicht, an adviser with Further Lane Asset Management sums it up as the "What am I paying you for?" question. The answer, says Lowlicht, is that it's the planner's job to mitigate losses in impossible markets.  No doubt, the current markets are testing investors' patience and trust. We invited Lowlicht and Michael Ervolini, a behavioral finance expert, to discuss these trust issues and dispense some practical advice about how to find an adviser you can live with.  Follow Intelligent Investing on Twitter.  Sign Up For The Weekly Intelligent Investing Newsletter.  Ervolini and Lowlicht's conversation veered quickly toward the importance of straight talk. If an adviser can't own up to losses suffered, explain why they happened, what the strategy was and is, and offer up proof that the losses would have been worse without them, along with a reasonable argument for why the strategy will work in the long run, it's time to dump them.  If you're in the market for an adviser, there's some work you can do in advance. First, ask for references before you hand over any money. A planner should be able to provide you three to five people to contact and question. If job candidates go through it, there's no reason your adviser shouldn't. Since references are self-selected, you should expect to hear some glowing reviews.  It's not a reference's platitudes that matter though. Ask how long they knew the adviser, how much of their net worth they put in the adviser's hands and what drew them to the adviser in the first place. The answers to why, how much and for how long matter much more than the reference's opinions.  Also, use the "check out brokers and advisers" link at the Securities and Exchange Commission Web site. When you want to check out individual brokers and advisers, the SEC will direct you to the Financial Industry Regulatory Authority's (FINRA) Web site. It's a good idea to do both an individual and a firm check. The results can be a bit confusing. FINRA reports tend to list complaints and results but not a lot of detail because arbitration proceedings are not public the way court filings are. Still, you can see complaints, a summary of the issue and, most important, the arbiter's decisions. Also included are enforcement actions taken by either the SEC or FINRA.  Lowlicht believes people looking for top to bottom financial planning should go with a Certified Financial Planner, a title awarded by the Certified Financial Planner Board of the United States. The board puts advisers through rigorous education and testing.  The Consumer's Research Council of America also publishes guides to the top financial planners and brokers. The group has an excellent reputation for consumer advocacy.  Finally, be sure to check with your state's regulatory agencies, they sometimes have more information than federal agencies or industry groups. Usually the state's investment authority is part of the secretary of state's office, though it is sometimes subsumed by commerce or consumer protection.  Lowlicht: Our business is very gray. And sometimes what's helped my clients a lot is quantifying what I've done for them in the position year. So, let's say I have a client who comes to me and has a million dollars and we've lost 15% this year. OK, they lost 150 grand. They have their benchmark, it's the S&P 500, let's say. Because they were mostly equity weighted. And I'm giving you a real example. This is a guy who's 38, had $1 million with me. The S&P was his benchmark and we were down 15%. He lost 150 grand. And on the surface there's this emotional thing, "I lost 150 grand! What am I paying you for?" and this and that. We sat down, we had a meeting and I go, here's your money, $1 million. You pay me 1%. You paid me $10,000 for that, OK. You lost 150 grand. Had you not hired me to go find you the best managers and allocate you in a way consistent with what you wanted with a benchmark of the S&P, you would've lost $400,000.  You are technically $240,000 wealthier because of the decisions we've made. And when the market turns around, you're going to have that extra $250,000 or $400,000 working in your favor, which is going to allow us to recoup our losses quicker. And it's going to position us for the next leg up. You're 38, and we're not touching this money for 21 years.  So, that quantifies it. And this guy literally got up from my office and said, "You know what, Marc? I really appreciate it. It puts things in perspective. I feel a little better." And it quantifies everything for them. Because at the same time they're not looking at their statement thinking, well, you know, I had $1 million and now I have $850,000. And, you know, that's not that bad. So, I've had that experience with numerous clients and it doesn't always work out as well as that one. That's an example of how I've dealt with a number of clients. And I would say 80% of them respond very positively to it.  Ervolini: To point out a hidden beauty in that--given that Marc is acting in the best interests of his client, which is first and foremost, by going through this process, he's allowing his customer to develop in their mind a narrative that allows them to accept what's going on and to look forward. That narrative is something they'll repeat in their minds, they'll repeat it to their mother, to their wife, whomever.  It is now a way of pulling all the disparate information together. Now they had a game. They have a game plan. They're confident that, at least for today, they know what they're doing and they're back to having trust and confidence. But if you just take all the disparate information on all the cable networks, then you have no narrative.  Lowlicht: But it also comes down to taking responsibility. Because I find in our business--and I've managed offices for some large wire houses--advisers are much more available when their clients are making money, but very hard to reach when they're losing money. Now when somebody sits down with you and you're saying, I understand we lost money. But we lost X, the markets lost Y. They understand that you're not avoiding the situation. You've accepted the fact that you've lost money. You're not hiding from it.  Forbes: Get an adviser who takes your calls. Now, everybody's terrified. We know that from looking at the banks. Is it time to buy?  Lowlicht: It's an easy question to answer. I think people are so used to immediate gratification, which is why we're where we are. It's "I'm going to borrow money to buy that today." There's blood in the streets. You can buy here, but you may not get the result a month from now. You may not get it six months from now. You're going to get five years from now, six years from now, seven years from now.  So I think the answer to your questions is, yes, you buy when everybody's fearful. But you can't expect to have the immediate gratification of an immediate positive result. You have to understand that you're buying here because it's cheap. It may get cheaper first, but over a long time horizon, which at any time you own equity should be at least seven to 10 years, over that time horizon, you are buying at a good entry point.  Ervolini: In all asset classes, that's probably going to be the case. And the other thing it affords you to do now is the opportunity to buy up in quality. So, if we relate it to a condo, maybe three years ago you found yourself priced out of your market. Now you might be in a place where prices have come down a lot. Not only might it be a good time to buy, but you should buy in a better location. So, long run, you'll come out not only with a lower basis, but you're appreciation potential will be better. It's hard, as Marc pointed out, to do that now knowing that it might be flat for years. And ultimately, it'll come back.  Lowlicht: You shouldn't buy individual stocks. If somebody a year ago told you Bear Sterns, Lehman, Fannie Mae (nyse: FNM - news - people ) would be taken over by the government You have to leave that up to the gentlemen who do that all day long. I'm not even capable of doing that research.  My job literally consists of understanding trust regulation, estate regulation, tax regulations, titling of property and that's a full day job. The best approach is to allow the people who do what they do best to do it, because even if you're very good at it or have good intuition, you don't have the tools or the time to do it. Analysts read day in and day out about the same dozen companies. They understand their balance sheets. They speak to their suppliers. They speak to their buyers. I can't do that.  I'm a big believer in the certified financial planner program. I went through it. I think that there are phenomenal, phenomenal brokers out there. There are some brokers who are smarter than I am. I have a very good friend that's at Janney Montgomery Scott. His name's Fred Kaulkstein. He's been in the business for 35, 40 years. I've learned a lot from him. He's a brilliant guy. No CFP, just a plain broker and as good as anyone in the business. But if you want to increase your odds of getting a planner who understands the planning process and the investment process, somebody who's gone through the rigorousness of the certified financial planning test will increase your odds of finding the right type of planner.  Ask for references. You should see what their credentials are. You should make sure that they're able to give you unbiased advice and are charging either a fee or a fee and commission, but disclosing everything to you And if a client doesn't feel they've gotten full disclosure, they should have run for the door. A client should know every expense right down to hidden expenses. No load mutual funds people think are free. They're not. There are underlying fees in there.  Forbes: Sure. And your planner should be a signed fiduciary, correct?  Lowlicht: As a CFP you are. I prefer that to be the case. I mean, your attorney and CPA are. So, why wouldn't you want your planner to be?  Ervolini: Yeah, and those two professionals may be able to point you toward at least people to interview. If you have an accountant and if you have an attorney, tell them I'm interested in meeting a couple financial planners. Can you introduce me to somebody?  Lowlicht: And you should always get more than one recommendation. Because my experience has been I have attorneys that refer me. But they also refer several other guys. I think any attorney or accountant who's going to only refer one planner, you have to worry that it's a friend or not the best choice. And I do the same thing. When I refer a CPA or an attorney, it's always three to four guys who I think are reputable. This way, the client has the final say and there's no bias to why I recommended one person over another.  Forbes: OK. And are there any sites where you can find a planner after giving it your zip code?  Lowlicht: There is a guide. I think it's the Consumers Research Council of America. They go out and sift through all the regulations and see if there have been any lawsuits against the planner. The also know the types of licenses they hold and the depth of their licenses or how many years in the business. And it will list people who have clean records in the business and have the continuing education requirements and belong to the right organizations and everything else. I don't know that it's foolproof, but it's definitely a step in the right direction. They do the same thing for doctors, attorneys and CPAs as well.  See More Intelligent Investing Features.
Financial planners you can trust are hard to come by, but background checks and interviews can do the trick.