A good salesman doesn’t always make a good financial advisor. And some clients are finding that out the hard way. A survey published by The Paladin Registry, a for-profit company that offers consumers free access to a Web-based database of credentialed and ethical financial advisors, shows that the biggest mistake consumers make when choosing an advisor is gobbling up the sales pitch. In light of the recent court ruling striking down the broker exemption or “Merrill Lynch rule” on fiduciary status, the findings are particularly compelling.

Indeed, accepting marketing information as accurate data was one of the most common missteps the respondents cited. More than 97 percent of the consumers polled (some 1,285 clients who had terminated their advisor in the prior 30 days) said that they picked advisors who sold themselves as trustworthy investment experts, according to the study. However, the consumers didn’t have any way to vet the advisors’ claims and see how they stacked up against each other. Rather, they relied on advisors’ verbal communication of those skills, which advisors prefer because it is easy to deny later.

“Verbal information really benefits the lower quality advisor. It’s very easy for him to deny things later,” says Jack Waymire, a retired institutional consultant and founder of the Registry. In other words, if an advisor is going to use his sales skills to win business and generate commissions, he would prefer verbal communication because there is no written record of what he told the client. The higher quality advisor with years of experience and more qualifications probably offers more written information. “They want documentation because they have nothing to hide,” he says. “Unfortunately, the average investor doesn’t know the difference.”

The second most common error cited by the study group was relying too heavily on advisor personality during the selection process. After hiring the advisor, the clients learned that personality has little to do with knowledge, experience, ethics or services rendered. “They let down their guard and selected advisors for the wrong reasons,” the report says.

Another misstep – highlighted by 82 percent of the respondents – was that they learned about the advisors they hired from the advisors themselves in the absence of an objective third party. “You don’t have to have a high school diploma to be an advisor or even one day of experience. That’s a reflection of the sales culture that dominates the whole industry,” says Waymire. “This creates an enormous range in the quality of advisors from somebody who is absolutely stellar to the advisor who you absolutely don’t want handling your money. It transfers all the risk to the investor.”

Investing in hot products that the advisor marketed was another critical mistake with 77 percent saying their judgment was skewed by their recommendations of top performing funds. “The investor actually had no idea when that advisor actually started recommending them,” Waymire says. “One of the things the advisors do is they pick hot products after the performance has occurred. So what they’re doing is selling a hot product to the investor but they’re positioning it in a way that says, ‘hey, I’ve been recommending this product for years’ when in fact they just picked it after the performance has already occurred.”

Lastly, 64 percent said they were greatly influenced by brand name, the report shows. They assumed that big firms only hired competent and ethical advisors so they didn’t do enough homework on their advisor and ask the necessary questions about their credentials. But Waymire argues that these big firms are part of the problem: “There is a night and day difference between a culture of sales and a culture of advice. Advisors that have gone off and become their own RIAs and have become more fee-oriented and are delivering value added services rather than just trying to sell product I think they’ve risen above the culture of their own industry.”

Waymire’s Registry is set up to help educate consumers on how to evaluate advisors and provides them with objective advice and a group of reps who acknowledge their fiduciary status and have a clean compliance record. Its screening criteria focus on four advisor characteristics: Competence, ethics, business practices, and wealth management services.

The Registry admits less than 10 percent of the financial advisors who apply. Advisors pay anywhere from $25 to $140 to list themselves on the registry depending on where they’re located along with a six-month association fee. (So while the firm bills itself as an educational resource for consumers it also gets paid to market certain investors – an inherent conflict).

Waymire hopes that the Registry, which currently lists 900 advisors, will go a long way toward curtailing the sales mentality of financial advisors. “The industry spends $300 million a year on lobbyists and one of the main things they fight is disclosure,” he says. “Well, what do they have to hide? Part of it is there is a sales culture.” Some of the big wirehouse firms believe that “advice is incidental to the sales process,” he says. “It’s a pervasive issue.”