For most people, choosing a financial advisor comes down to trust. But trust is hard to verify, especially when nearly everyone in the industry uses the word “fiduciary” to describe their services. Tom Batterman, a retired financial advisor who spent more than three decades in Wausau, Wisconsin, and now splits his time between Wisconsin and Florida, says consumers can use one simple question to identify who is actually working in their best interest.
“There’s a very simple test,” Batterman said. “Do they hold a securities sales license?”
What Licensing Reveals
According to Batterman, that single question can reveal a lot. If an advisor holds a Series 6, Series 7, or Series 63 license, they are legally permitted to sell investment products, which means they can earn compensation tied to the products they recommend. That arrangement creates a conflict of interest built directly into the relationship, whether or not the advisor discloses it clearly.
“The only reason that they hold those licenses is that they need to be able to hold them to sell you investment products,” Batterman said.
By contrast, Batterman spent his entire career avoiding those licenses altogether. He held a Series 65, which qualifies an advisor to give investment advice, but does not allow the sale of investment products. For Batterman, that distinction was not a technicality. It was the reason the test works.
“People who don’t sell investment products, like us, don’t require those licenses, so we don’t have them,” he said.
Building a Fee-Only Career
Tom Batterman built his career around the fee-only model, meaning his only compensation came directly from clients rather than from commissions or product sales. He founded Vigil Asset Management Group in 1988 and later founded Financial Fiduciaries, LLC, where he worked with individuals and small mutual insurance companies for decades before retiring.
Throughout his career, Batterman said the licensing question became one of the clearest ways to explain the difference between advisors who sell and advisors who advise. He recalled one prospective client who mentioned an annuity that promised a guaranteed return. Rather than dismiss the idea, Batterman offered to look into it seriously.
“I’d love to see the details on that, because if that in fact is true, I’ve got tens of millions of dollars of client money that I would like to direct into that type of investment,” he said he told the client. Once he reviewed the numbers, the return was nowhere close to what had been advertised.
Why the Distinction Matters
For Batterman, that story illustrates why the licensing question matters. If an advisor can sell you a product, that advisor has a reason to make it look appealing, even if it is not the best option available. If an advisor cannot sell products, the test points you toward someone who has no reason to do anything except research every alternative and recommend what fits a client’s situation.
“If somebody’s got a sales license, that means they’re in a position to sell product to you, and to me, that’s the kind of thing you’d want to steer clear of,” Batterman said.
A Continued Focus on Education
Batterman has spent much of his career trying to make this distinction easier for consumers to understand, including through lectures to financial planning students at the University of Wisconsin-Madison and a presentation to the Marshfield Clinic health system’s retiring employees. He has also written on financial planning topics for the AAII Journal.
Now retired and dividing his time between Eagle River, Wisconsin, and The Villages, Florida, Batterman continues to view financial education as a public service rather than a marketing tool. His advice to consumers remains straightforward: before hiring an advisor, ask the licensing question first, and let the answer guide the rest of the conversation.
Feature Image Credit: Getty Images on Unsplash
