Financial Advisors: Who can you trust?
Sometimes it is easier to learn which advisors you should avoid versus learning how to select the best advisors. This can be tougher than it sounds because good and bad advisors look and sound a lot alike.
Bad advisors are not bad people. They may have great personalities and are extremely likeable. Unfortunately, these character traits have nothing to do with competence or ethics.
Some of the most dangerous advisors are likeable and they possess exceptional sales skills. They are very skilled at convincing people that they are real advisors who put their client’s financial interests first.
So, who should you avoid getting financial advice from?
No one likes feeling like they might be taken advantage of and the financial services industry preys on the unsuspecting public.
However, there are pluses to working with a financial advisor. Good advisers help their clients stay the course, helping clients manage the psychological roller coaster ever-present when markets swing wildly during economic tumult. There are plenty of great advisers. But you have to look carefully for ones that aren’t just paid a commission to sell you products.
Much like you'd go to the doctor for health reasons—you may want to build a relationship with a "money doctor". Financial advisors often have the knowledge and experience in working with all sorts of financial products and services that you may not have the time to devote to learning. A great financial advisor will have many years of handling different sorts of complex financial and life situations and can use that experience to help you address your own unique needs and wants.
However, in the end, the conflicts of interest in dealing with an advisor are a huge distraction from getting the financial help you need to be successful. If advisors are not making money for their company, they are not an asset to the firm. This means if they are not gaining clients and bringing in money management fees and commissions, they will surely lose their job.
This means that “sales skills” are the premium at financial institution, not necessarily financial acumen. And, the customer is the one who always pays the price.
I understand that people choose salespeople that they know, like, and trust.
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ABOUT THE AUTHOR
As a Certified Financial Education Instructor and Certified Life Coach, Joe is a bestselling author and a leader in the financial services industry who is on a personal mission to help millions of “Middle-class Americans” dramatically improve their financial well-being.
He was previously the featured columnist for www.Money.net, has recently published a book titled: MoneyRx: Your Prescription for Financial Success (available on Amazon.com) and also posts a weekly blog at www.moneyrx.net. Joe is also a featured speaker for the Personal Finance Speakers Association (www.financialeducatorscouncil.org/joseph-newtz/).