You need to know there are real financial planners and there are bogus financial planners. The fake planners use the title to reduce sales resistance when they sell investment and insurance products. For example, a plan may recommend a substantial purchase of insurance products. You are more likely to buy if it is recommended by the plan and not by the financial planner. What is the difference? There is no difference when the plan represents the financial interests of the planner.
There are no industry regulations that limit who can call themselves financial planners. A brand new sales rep may adopt the title to facilitate the sales of financial products. There are no tests to make this claim more valid and there are no licenses for financial planners. If you are asking why, it is because Wall Street firms also benefit from this deceptive sales tactic. The firms make more money when they make it easy for their reps to sell investment products and services. And make no mistake. Wall Street has tremendous influence over the regulations that govern the industry. Continue reading →
Paladin began providing services to investors in 2003 when its book, “Who’s Watching Your Money?” was published for the first time. This book set the standard for vetting financial advisors to determine if they are using deceptive sales tactics to gain control of investor assets. Any financial advisor who uses deceptive sales practices cannot be trusted to provide competent, ethical financial advice. In fact, investors should avoid these advisors because they represent hidden risks that could be catastrophic. Continue reading →
Most investors are confused by the roles of financial planners and financial advisors. In fact, over 75% of investors say they do not know how they differ. They believe these are two roles that provide the same services. Not exactly!
One source of the confusion is anyone can call themselves financial planners whether it is true or not. There is no regulation that prevents this deceptive sales practice. Not too long ago, 70% of planners were actually insurance agents who called themselves financial planners for two reasons. First, the role of the planner was more acceptable to people than the role of agent so there was less sales resistance. Second, they used the financial plan to sell large amounts of insurance products (annuities, life insurance, long term care). Again resistance was lower because the clients’ financial plans recommended the products not the agent/planner. Continue reading →
Market Risk and Behavior Risk are well known and frequently discussed. But, there is another type of risk that is often overlooked; The Advisor Risk.
Investors that recognize that they don’t have the time, knowledge or inclination to deal with market risk, and/or the discipline to deal with their own behavior risk may seek advice, and unwittingly run into a third level of risk: The risk that their advisors are either not working in their best interest and/or are incompetent. This third risk is little discussed or appreciated. But, advisor risk is not trivial. Countless investors that delegated their investment decisions to so-called professionals have been devastated during the recent bear market. Continue reading →
There is a one-page document that would stop Wall Street’s most deceptive sales practice in its tracks. Investors should ask for this document every time they select a new financial advisor. However, most investors don’t know what they don’t know. In this case they don’t know they can require the one-page document from advisors who want to control the investment of their assets.
What is Wall Street’s most deceptive sales practice? 75% of all so-called advisors are really sales representatives who are paid commissions to sell investment products. However, they are not required to disclose this fact to investors. They claim to be financial planners, financial consultants, and even financial advisors to camouflage their actual role of sales rep. Why hide this role? Investors do not want sales reps investing their assets. Consequently, there would be increased sales resistance if they knew the truth. Continue reading →
Most investors are not aware there are financial advisors and sales representatives (reps) who have very different services, agendas, and business practices. You can blame sales representatives for the confusion. Most of them refer to themselves as financial planners or financial advisors because they know investors do not want sales reps investing their assets. If they disclosed their real status, they would lose sales.
Following are five tips that will help you quickly and easily determine who are the real financial advisors and who are the sales representatives who are masquerading as advisors. Make sure you select a real advisor by requiring documentation for the following information. Continue reading →
More financial advisors are leaving big Wall Street wirehouses to go to smaller firms or start their own firms. They have a number of reasons for making the change, but most say they are fed-up with continuous headlines that document company scams and deceptive sales practices. They can’t change their firms’ business practices so their only choice is to change firms.
All advisors claim they change firms so they can provide higher quality services to their clients with no conflicts of interest. This is true half of the time. The other major reason is the advisors may make more money at the new firm, a lot more money. Continue reading →
Have you watched the award-winning TV drama “The Good Wife” that revolves around a scandalized politician and his humiliated wife who leaves her comfortable suburban lifestyle to resume her legal career in order to take care of her family? The couple eventually sells the property as part of the divorce but in a plot twist later end up vying for buying the home again against each other when it comes back on the market. There’s the struggle of trying to arrange financing with not enough income or money for the down payment and the intra-family power struggle with the moneyed mother-in-law who is also trying to buy the home. There are the emotions of watching their kids growing up in the home mixed with the pain of the scandal and divorce. Continue reading →
Based on Investor Watchdog research, people are very dependent on the ethics of financial planners, financial advisors, and money managers. They “hope” these professionals provide ethical advice that helps them achieve their financial goals. This “hope” has a major adversary. Wall Street firms want to minimize the ethical standards that apply to the legions of sales representatives (reps) that sell their products.
Investors have a tough time measuring advisors’ competence and trustworthiness because they do not have track records or mandatory disclosure requirements. Wall Street likes it this way. In fact, financial service firms spend millions of dollars per year on lobbyists who minimize industry standards for the ethical treatment of investors. Continue reading →
My answer is “Yes” if the following five conditions are met:
All of their advice is based on the needs of investors
Advisor ethics always put investor interests first
Advisor competence enables them to deliver competitive rates of return
Advisors provide a disciplined investment process
Performance includes reasonable risk and expense
Unfortunately, less than 25% of advisors are capable of meeting all of these criteria. The other 75% are sales representatives who make their living selling investment products. Unfortunately, investors don’t know the critical differences between advisors and reps because they don’t have an effective process for selecting high quality advisors. See Do Financial Advisors Have Two Faces? for more on the topic of sales representatives vs. financial professionals providing services for fees. Continue reading →