MONEY MATTERS: CAREFULLY QUESTION FINANCIAL ADVISER.

Byline: John Cunniff Associated Press 

Looking for a way to invest? There are 9,400 mutual funds and most are eager to provide you with literature about their subtly different approach to the market.

But attempting to assimilate the confetti of statistics offered by them can compound rather than reduce your confusion. And the search for clarity can be totally defeating in the sea of data available on the Internet.

You can turn to a financial adviser, but here too you are faced with tough decisions. There are 24,000 Registered Investment Advisors - the number about doubled in a decade - who will handle your business for a fee.

Again you are faced with an overload: How do you choose from among them, especially when any adviser worth an asset fee of 1 percent to 2.5 percent will extol his or her talents, and usually do it convincingly?

You ask questions. And they begin with yourself.

Before you even investigate an adviser's performance record you must determine if he or she has views compatible with yours and is agreeable to you personally.

Only then do you ask to see the adviser's Form ADV Part II, a disclosure document required by the Securities and Exchange Commission and available to all investors that provides such information as a business history and sanctions by regulators.

Since the ADV is only the latest 10-year history, it might be wise to ask if the adviser has ever been sanctioned or had an adverse judgment related to investment activities that doesn't show up on the ADV.

If any questions remain, you may contact the National Fraud Exchange, a Washington, D.C., nonprofit organization that for $39 will conduct a background check on a particular adviser.

Despite such efforts, it is difficult to accurately assess an adviser's performance claims. There is no central performance rating agency, so the best questions to ask are in the area of client profits. How good are they?

Gary Halbert of ProFutures Capital Management, which specializes in fund information, says it is a must to ask where your assets will be held. In all instances, he says, they should be on deposit with a trust company or broker.

Halbert adds these questions:

May I see your power of attorney forms?

Every adviser is given some limited power of attorney, generally only the right to enter buy and sell orders. Make sure you don't give too much control to the adviser.

What are the numbers for your worst month, worst 12 months, worst 36 months?

How much money do you manage?

What level of communication may I expect from you? Some advisers call you frequently, others wait for you to call. At the very least, make certain how often you will receive statements of activity.

How much of your own money do you have invested in your programs? The reasons for this question are obvious.

If finding answers seems too much of a chore, Halbert's company, based in Austin, Texas, (1-800-348-3601) offers a free evaluation and referral service matching investors with a pre-screened money management firm.