Tag Archives: Financial Consultant

Do I Have a “Real” Financial Advisor?

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A Watchdog visitor questioned whether the person providing him with financial advice was a real advisor. He thought the person was an advisor, however a business associate told him the person was really a sales rep.

He should be concerned. If the person misrepresented his role, then his financial advice may also be tainted.

Very few consumers would be comfortable knowing a sales rep was influencing or controlling their investment decisions. However, this is why reps misrepresent roles. They want to minimize sales resistance and maximize incomes.

How do you know the person advising you is a “real” advisor? Ask three questions and make sure the person responds in writing. Do not accept verbal responses. You want a written record.

What licenses or registrations do you hold? Sales reps hold Series 6 or Series 7 licenses that limit them to selling investment products. Real advisors are Registered Investment Advisors or Investment Advisor Representatives that permit them to provide financial advice and ongoing services.

How are you compensated? Sales reps only method of compensation is commissions. Real advisors are paid with fees or commissions, but primarily with fees.

Are you willing to acknowledge you are a financial fiduciary in writing? Advisors will answer Yes. Sales reps will answer No. Fiduciaries are held to the highest ethical standards in the financial services industry.

Remember, get the responses in writing. When it comes to your assets, trust what you see, not what you hear.

What You Should Know About Bad Advice and Sales Practice at the Cost of the Client’s Interest

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 Very Popular Sales Practice Results in Bad Advice at the Cost of the Clients interest!

When you meet with an Advisor, Broker, Financial Consultant, Investment Representative or however someone describes themselves, buyer beware!!

How some brokers hide bad advice!

The true intentions of a lot of these individuals is SALES, pure and simple!! In this brief article I am going to share with you two key indicators of when one of these individuals are actually trying to sell you a PRODUCT as opposed to ADVISING you on which solution makes the best sense for your situation. The fact of the matter is simply this. It is much more time consuming, complicated and requires a level of due diligence to fully understand and apply various financial solutions for different needs versus the single exercise of understanding one product and selling it’s benefits and track record as a all in one solution for anyone. 

First Red Flag indicator of Bad Advice “GREED”;

A discussion framed around the points of how well a product has done over time, it’s safety, low risk but always produces a high return. This approach attempts to trigger your greed for profits with virtually no risk. If it’s too good to be true it probably is! 

Second Red Flag Indicator of Bad Advice “ FEAR”;

A discussion framed around the fear that you will not achieve your goals unless you invest with me and the products I have available. I have access to these products and if you do not act soon you will fall further behind in your quest to achieve your important goals of a comfortable retirement, college funding or other financial needs. 

Do yourself a favor and be on the lookout for these signs bad advice. You may want to consider a fee only planner to ascertain your situation before you consider reallocating your assets.

What is the future of Fiduciary?

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Fiduciary. For many RIA?s (registered investment adviser) this term is a primary reason for choosing to identify, define, and distinguish their practice from non-fiduciaries. It also can be used by consumers as part of their criteria in choosing an adviser to develop a relationship with. A fiduciary from the perspective of the RIA and the client can be outlined as follows: A Fiduciary duty generally is considered to be the highest legal duty that one can have to another, and according to the Investment Adviser Association?s definition found in its standards of practice, ?As a fiduciary and investment adviser has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interest of its clients. The parameters of an investment adviser?s fiduciary duty depend on the scope of the advisory relationship and generally include; the duty to at all times place the interests of clients first, the duty to have a reasonable basis for its investment advice, the duty to seek best execution for client securities transactions, the duty to make investment decisions consistent with any mutually agreed upon client objectives, strategies, policies, guidelines and restriction, the duty to treat clients fairly, the duty to make full and fair disclosure to clients of all material facts about the advisory relationship-particularly conflicts of interest, the duty to respect the confidentiality of client information.

Given the above perspective, holding oneself out as a fiduciary should make acquiring the critical level of trust to engage an adviser/client relationship more efficient. However, much of the public that I have conversed with regarding the differences between an adviser with a fiduciary responsibility and a non-fiduciary, are unaware of, or are confused as to the benefits of this attribute. The media?s and investment industry?s substitution of the phrases ?financial consultant?, ?investment adviser?, and ?financial adviser? contributes to this puzzlement in the minds of consumers. Further clouding the issue are transaction based brokers that have set themselves up in a dual capacity as an adviser with fiduciary responsibilities as well as a broker with a suitability requirement. This bifurcated role begs the question of when to turn on the fiduciary switch and when to turn on the suitability switch.

Obviously clarification and guidance are needed either from existing regulatory agencies or possibly new a SRO (self regulatory organization). Given the past years market volatility and the high profile headlines of Bernard Madoff et al., it is certain changes are on the horizon for all participants in the advisory business.