WASHINGTON — Gotten a good tip on a financial adviser lately?

Consumers who decide they need help in choosing investments may find that choosing an adviser is the first step — and that winding up with the wrong adviser is a costly misstep.

A few years ago, Michael Kostoff, a retired teacher in St. Augustine, Fla., turned for advice on how to invest her retirement nest egg to Vincent Cervone, a financial adviser recommended by Kostoff's brother-in-law, a doctor.

But instead of safer and more-suitable bonds and large-company stocks, Cervone put the bulk of her $114,000 into highly speculative micro-cap stocks, including NeoMagic Corp. and Cypress Bioscience Inc., according to allegations recounted in an arbitrator's award in June against a firm that helped handle the transactions.

Net loss: her entire investment.

Her brokerage, meanwhile, pocketed $19,000 in trading commissions on the account, according to Kostoff's lawyer, Theodore Davis, of New York.

"The motive for making the trades was to generate commissions that were in the brokerage's interest but not my client's interest," Davis alleged.

With more baby boomers worrying about their finances and finding an exploding number of confusing financial products on the market — variable annuities, wrap accounts, private real estate investment trusts, unit trusts — the financial-advice business is booming.

Mary Schapiro, NASD's vice chairwoman, says the need for investors to check out who's giving them financial advice is more acute than ever. "There are firms out there you definitely do not want to do business with," she says.

As it happens, Kostoff was fortunate. Though Cervone has left the industry and his main former employer, Glenn Michael Financial Inc., of Melville, N.Y., had closed its doors, an NASD arbitration panel ruled against the firm that did back-office work for the brokerage. In a rare decision against a so-called clearing firm, the panel ordered Fleet Securities Inc., now part of Automatic Data Processing Inc., of Roseland, N.J., to pay $460,000, including $343,000 in punitive damages, finding that the firm should have known about the "fleecing" of the Kostoff account. A spokeswoman for ADP declined to comment.

Timothy Feil, a lawyer for Cervone, said his client settled a related arbitration case "for a nominal amount" without admitting wrongdoing, and wasn't a party to the arbitration case, which involved a separate firm. Therefore, Feil said, Cervone did not have a chance to present his side of the story.

"We adamantly deny any inference of wrongdoing that may have been made in the award," Feil said.

Most victimized investors aren't as lucky as Kostoff, but investors can protect themselves by doing their homework before they entrust others with their financial futures.

Regulators, financial planning experts and consumer advocates say the first step is to understand who is in the market and who regulates them. If you are confused, you are not alone. NASD lists dozens of professional designations for investment advisers, from AAMS (Accredited Asset Management Specialist) to WMS (Wealth Management Specialist). There are Qualified Financial Planners, Personal Financial Specialists, Chartered Retirement Planning Counselors, Certified Retirement Financial Advisers and many more.

Background checks online

To check whether a broker has gotten into trouble with regulators or customers, investors should go to www.nasd.com and click on the BrokerCheck tab.

Investors need to know either the broker's Central Registration Depository, or CRD, number or the name of the broker's employer. To find out, ask the broker.