Many people depend on financial advisors to handle some part of their financial affairs. Giving over that kind of responsibility can be scary, so it is important that advisor be both competent and working in your best interests.

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While it is difficult to know these things with absolute certainty, there are some obvious red flags that investors should watch for. If research into your advisor raises one of these flags for you, it may be time to move on - or at least to begin asking questions and digging deeper.

1. A Lack of Credentials
Everybody wants to know that an advisor is knowledgeable and experienced. One clear sign that this may not be the case is a lack of professional credentials, such as a CFP, CFA, CPA or ChFC. It is well worth your time to learn more about these designations and what your advisor has done to earn them. This will give you an idea of what services he or she can provide you.

If you just want tax advice, a certified public accountant (CPA) may be the way to go. If you want investment advice, then a Chartered Financial Analyst (CFA) is probably better than a CPA. If you want an entire financial plan, then a CFA, certified financial planner (CFP) or chartered financial consultant (ChFC) may be best – or a person holding some combination of certifications. The most important point is that a certified or chartered advisor has been certified by a professional body and, therefore, has met that body's standards. If your advisor hasn't been certified or is certified only in an area unrelated to the specific service being provided to you, you should definitely find out why. (To learn more, read The Alphabet Soup Of Financial Certifications.)

2. A Lack of Time
If your financial advisor can't find the time to have at least one thorough meeting a year, then you have a problem. In the world of financial advice, it really is all about you and what your goals and needs are. A lot can change over the course of a year, so your advisor needs to be updated in order to be effective. If your advisor can't seem to find the time to discuss your specific situation, what other corners might he or she be cutting? (Learn more in Shopping For A Financial Advisor.)

3. Poor Communication Skills
If your advisor is struggling to explain financial strategies or concepts to you, it may be because he doesn't actually understand himself. There are very few financial concepts that can't be explained succinctly to a person with an average grasp of personal finance. Just because you do not understand does not mean your planner doesn't either. But if your advisor is having trouble communicating, this is a problem and you might want to find someone who knows how to make you understand. (Check out Advice For Finding The Best Advisor.)

4. Big Promises
Anyone promising more than 8% returns with any certainty is either understating the risks involved or overestimating their own skills. An advisor can mention potential returns as long as they do not guarantee anything. While it is nice for professionals to be confident in their abilities, it is better if they are honest about the chances and clear on the risks that have to be taken to produce those excessive returns. Many low-risk, high-reward strategies either prove to be higher risk than originally presented or lower return. You might also want to look out for a potential scam.

5. Lack of Transparency
A financial advisor who only pushes products that pay her a commission might be more of a salesman than a financial advisor. Commissions are not bad as long as all fees are clear and out in the open if you request them to be. Most people want an advisor who can give them exposure to a range of the best products that meet their needs. This might include non-fee-paying, lower management products. Ethically, advisors need to do what's best for the client first. If your advisor is always pushing a particular set of products for every situation, and someone other than you benefits most, it is worth asking her who she is really working for. (Learn the clues you'll need to determine whether you've chosen a reputable professional in Is Your Broker Acting In Your Best Interest?)

6. Too Much Salesmanship
If your advisor is trying to sell you on some dark-pool derivative swap that you are having trouble grasping, is it really something you should be investing in? Again, the financial plan an advisor makes is supposed to be tailored to your goals and your comfort level. If your advisor wants to get you into a new comfort level, he must be able to make a compelling case that you can understand. Moreover, any strategy must clearly meet your goals and compare favorably to alternative strategies as far as risk and reward are concerned. Some people are comfortable not knowing anything and simply trusting their planner with their money. If you are not, then speak up.

7. Disorganization
For some people, organization is a matter of personal taste. It is possible to be very good at your job without being very organized. However, most people would feel a bit nervous if their surgeon kept mixing up instruments and had trouble remembering where he put that local anesthetic. Financial advisors are expected to be just as professional, and if they are very good but not very organized, they will hire someone to be organized for them. If your financial advisor isn't organized and can't afford to hire someone who is, then you have a potential problem.

The Bottom Line
Depending on your personal take on your advisor, these signs may not be deal breakers. For example, although all advisors should be able to explain financial concepts to you and be open and honest with you, dropping an advisor solely for a messy filing cabinet may not be prudent if you are happy with the service he or she provides. However, if you are reading through this list and nodding your head at more than one of these points, it may be time to shop around for a new advisor. You can use some of these red flags as a jumping off point that will help you filter candidates in the future.

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