Keep your money from being "Madoff'ed"

Bernard Madoff is getting sentenced today for running a massive scheme and swindling investors out of more than $50 billion. Prevent your money from being "Madoff’ed." Here's how:

1) Do your homework

Look at their records by going to Finra.org. That Web site is managed by the Financial Industry Regulation Agency. The Brokercheck function on this site will give you the qualifications, including licenses, registrations and exams the broker has passed. You’ll also get the brokers employment history for the last 10 years. Look for the disclosure section that will list any trouble your broker was in. And make sure you get references from past and current clients.

2) Beware red flags

Watch out if your planner guarantees big returns on investments. Investing is always risky. And results should never be guaranteed. When purchasing investments, make sure you are writing checks to a third-party custodian, like T. Rowe Price or Fidelity Investments. Don’t write checks to your financial adviser directly, says Doug Flynn of Flynn Zito Capital Management.

And finally, you should never feel pressured to buy a specific product. Be wary of any adviser who dodges your questions or tries to put a positive spin on everything. Make sure they are a fiduciary - this is an ethical standard. A fiduciary is legally bound to watch out for your best interest. If someone does not have this designation, they are not required to put your best interests first, says Wayne Cooper of Wealth Management Exchange.

3) Know the potential conflicts of interest

Find out how your financial adviser gets paid. Some charge by the hour or a flat rate. Others earn money through commissions on products they sell. It’s not unusual for planners to have working relationships with companies that sell insurance policies or mutual funds. Make sure get a written description of any conflicts of interest.

If you’re in the market for financial planner, it's worth your while to check out fee-only advisers so you don't have to worry about anyone selling you a product for their personal gain.

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