Your Finances: Finding an investment adviser

The Securities and Exchange Commission is taking its own sweet time coming up with a rule that would make all investment advisers put their clients' interest first.

It's been almost a year and a half since the agency said it would pursue this so-called fiduciary standard. It is trying to contort the standard in such a way that brokers who are paid commissions to sell products could fit under that definition.

If you're looking for an investment adviser, start with one who is a true fiduciary. Here's how to find an investment adviser now.

Refuse to play semantics. Many advisers now call themselves "fee-based." That's not the same as fee-only. It may just mean that they charge you fees and sell commission products to you that then kick back extra to them. Ask them if they are "fee-only."

Go for a brand-name custodian. Don't let an independent adviser hold your money directly.

That's the mistake clients of Bernard Madoff (who was nominally a fiduciary) made. Make sure that your account is housed at a brand-name Securities Investor Protection Corp.-backed brokerage firm, like an Ameritrade or a Charles Schwab or the like.

Don't overpay. A 1 percent fee may be high if you're just getting generic mutual fund-picking advice, and if you're willing to do your own trades.

If you have a $1-million portfolio and are paying an adviser 1 percent, that's $10,000 a year for investing advice. "What exactly are you getting for that?" asks Sheryl Garrett, a Shawnee Mission, Kan., adviser who only bills hourly or by the project. She says she typically gives a year's worth of investment planning for clients for roughly $2,000 or $3,000 a year.

Benchmark those returns. You might have an honest and caring and affordable financial adviser, but if she's managing your money, is she doing any better than you could do on your own with a couple of generic mutual funds?

If you are investing for retirement, find a proxy by which you can measure your adviser. Look at a low-cost target- date retirement fund for your age group, or use a website such as Yahoo Finance or Morningstar.com that allows you to monitor "play" portfolios to create a no-brainer portfolio of low-cost stock and bond funds.

For example, you could check your adviser's performance against that of the Vanguard Target Retirement Fund at personal.vanguard.com/us/funds/van guard/TargetRetirementList.

Over time, of course, your money manager should provide higher returns, net of fees, than the do-it-yourself approach.