Last Updated on February 26, 2021 by Marie Bautista
Is your financial advisor pitching you financial advice with your best interests at heart?
Here’s why I asked this.
A report released by the Consumer Federation of America who sampled 25 major brokerage firms and insurance companies said that brokerage firms and insurance companies may call their professionals “financial advisors” BUT
“these individuals often are actually sales representatives who pitch mutual funds, annuities and insurance products.”
So the question now is:
Can you trust your financial advisor?
We always get a pitch from financial advisors.
And we are not sure if they TRULY care for us or if they only truly care for their commissions.
Are there ways to learn if they really are knowledgeable and competent and not just trying to make a sale?
- Don’t get a VUL just because your Tita’s anak who happens to be your kinakapatid is trying to sell you one.
- Don’t get a Mutual Fund just because the Boss got one and he referred his agent to you.
- Don’t invest in the stock market just because everyone is doing it.
Having and knowing the RIGHT FINANCIAL ADVISOR could help you make better financial decisions and avoid COSTLY FINANCIAL mistakes.
Here are three steps to know if you can truly trust your financial advisor
1. Know that everyone is trying to be a financial advisor (they dish financial advice to you all the time!) and you should learn to recognize which advice is good and which one is not.
Everyone is giving financial advice (err, are you looking at me?).
Advice can come from your boss, your dad, your mom, the bank teller, your doctor’s secretary, Piolo Pascual, Xian Lim!
Everyone is concerned about money and how to grow it.
No, it’s not true. Love won’t keep you alive! Money is such a big part of everyone’s lives that everyone has something to dish about what worked well with them.
Like, one of the financial instruments that worked well with me is the UITF, that is why I wrote about it in this post.
A bank manager tried to pitch a credit card to me, promising a bigger credit limit. “You could get an installment plan for your child’s tuition fee,” she told me.
A friend said the safest way to grow your money is a savings account.
So dami the financial advices!
Advice could also come from media.
Like there was a TV ad about a bank that finds ways, right? I SERIOUSLY wanted to get a car loan because the guy in the TV ad who was way way younger than I was got a key to his new car!
Imagine how many newly-employed young adults would try to get a car loan! This is a TV commercial which no doubt made a very big impression on people watching it. That’s how powerful this financial advice is. Heck, my little boy was telling me that his ate should get one to fulfill her #cargoals!
2. Ascertain your Financial Advisor’s Competency.
Learn to ascertain how competent your financial advisor is.
And by the way, don’t look at a person’s position to determine how competent he is.
I went, “What about UITF’s? Are you offering me one?”Her answer?”Let my staff talk to you. I know UITFs, but she knows more kasi nag-attend siya ng seminar.”
I presumed that she knows the bank’s financial instruments because she has been with the bank for 30 years
Is she competent enough to explain UITFs to me, though?
She may be with the bank for 30 years and I am sure she can recite and explain company procedures and specific products by heart. With UITFs though, her staff, who must have undergone training and exposure to UITFs, may be more competent.
So, how can you tell if your financial advisor is REALLY COMPETENT?
“This lady who has a charm store told me this sort of stone attracts money.”Her wise answer, “Everybody wearing that bracelet should be rich by now. Are they?”
Does your financial advisor know what he is offering you? Does he have it in his portfolio? If he does, how good is it making?
Look at his own personal results. And judge if he is competent to be offering the product to you.
3. LOOK AT HOW OTHER PEOPLE REVIEW THE RESULTS OF YOUR FINANCIAL ADVISOR’S ADVICE.
Look at the results of your financial advisor’s clients have gotten because of your financial advisor’s advice. This is actually better than the first (his results with this competency) because it means that his advice does not only work for himself but for the people he worked for.
DOES YOUR FINANCIAL ADVISOR KNOW THE LATEST UPDATES AND DEVELOPMENTS IN THE FINANCIAL WORLD?The world market is volatile. It changes by the minute!
Is your financial advisor aware of what is going on?
Is he taking courses/training to enrich himself periodically?
DOES YOUR FINANCIAL ADVISOR CARE FOR YOUR FINANCIAL ADVANCEMENT OR DOES HE CARE MORE FOR HIMSELF?
Recognize subtle signs if your financial advisor is just out to make a sale. Does he withhold advice and would only tell you if you buy? Or does he genuinely care and would explain every single detail to help you decide on a financial product?
SO, CAN YOU TRUST YOUR FINANCIAL ADVISOR?
Going through the 3 steps as I mentioned above is very helpful. To repeat:
- Learn to recognize which advice is good and which one is not.
- Ascertain your Financial Advisor’s Competency.
- Know the subtle signs if your financial advisor is out to genuinely help you or if he is just eager to make a sale.
Moreover, your instinct or gut feel will also warn you if your financial advisor has your best interests by heart or not.