You have a choice! You can control the process you use to select a financial advisor or you can let advisors control the process. Because you may not have a process, advisors are more than happy to step-in and provide one that helps them sell financial products.
Advisors use a four step sales process to gain control of your assets. First, they want you to like them. Second, they know you trust people you like. Third, they use trust to convince you they are financial experts. Fourth, once you believe they are experts they know you will buy whatever they are selling. Virtually every advisor in America uses some variation of this sales process because it works.
When advisors control the process you only hear what they want you to hear. They can omit everything else because they do not have mandatory disclosure requirements. For example, they withhold any information that discloses their weaknesses. They may misrepresent information about their credentials and ethics. They may exaggerate the results they have produced for their current clients. They use misinformation to convince you they are trustworthy experts and to compete with higher quality advisors.
So how can investors take back control of the process to protect their own financial interests? It is actually easier than you might think. You don’t have to develop your own process. You can use the free tools that reside on this website (www.InvestorWatchdog.com).
You should have three goals for your process. Goal number one is to gather the same data from all of the advisors who are included in your selection process. You want the same data so advisors are easy to compare to each other. It is next to impossible to compare advisors when all of their information is different.
Your second goal is to gather data that really matters. Advisors use sales pitches and claims to convince you to buy what they are selling. However, pitches and claims have nothing to do with the advisors’ expertise and trustworthiness. You want information that describes their experience, education, certifications, compliance records, fiduciary status, and services. This is information that impacts the achievement or your financial goals. Your risk of selecting the wrong advisor skyrockets when they control what you hear.
Your third goal is documentation for the data that really matters. Lower quality advisors prefer verbal information because it increases the impact of their sales skills. And, in the absence of documentation, advisors are free to use aggressive sales tactics that have one purpose – convince you to buy what they are selling.
Advisors are less inclined to use omission, misrepresentation, and exaggeration when you require them to document this information. That’s because you may turn their information over to an attorney, compliance officer, or regulatory agency. You have evidence if they used illegal sales tactics to gain control of your assets.
There is one more issue. Advisors have documentation that protects them. It is called a sales agreement. If you read the agreement you will find a lot of language that protects the advisor and his firm. Very little or none of the content protects you. The type of documentation I am recommending does help protect you from unscrupulous advisors who use deceptive sales tactics.