Where to Get Financial Advice

Print Friendly

Every formal financial relationship requires a Fiduciary trust.  Wikipedia describes fiduciary as a:

good conscience [that] requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.

Put simply, in a fiduciary relationship an advisor will do what is best for you (the client), not what is best for herself (the agent).


The Wealthy Barber

David Chilton warns:

Most insurance agents sell cash-value policies; mutual fun salespeople sell funds and tax shelters; brokers sell stocks and bonds; bankers sell guaranteed investment certificates … Product sales are where the money is, so very few of them are true financial planners.

You always want to be sure that whoever is giving you financial advice is giving you advice for your benefit.

Who not to ask for financial advice:

  1. The person at work or the relative who is always bragging about their great investments.  Why?  Likely this person is in horrible financial condition or their investments are extremely high risk.
  2. A person who approaches you.  When someone comes with an investment opportunity it is more than likely for their own benefit more than your own.
  3. A person who receives commissions for only one type of financial product sale.  For example, if a person only gets commission for selling mutual funds in the XYZ mutual family they likely will not recommend something from the ABC mutual fund family, even if there is an option better for you.
  4. A person who you just have a bad vibe about.  Emotions do play a huge role in investing.  At times that is good, and at times it is extremely dangerous.  This is a great time to follow your gut.  If it does not feel right, it’s not.
  5. A person who spends more time trying to sell you on the product than they do trying to teach you about the product.  Such a person uses phrases like, “trust me”, “believe me”, “I can assure you this is best.”
  6. A person who makes unrealistic promises. The only way to increase gains is to increase risk.  If a person is promoting a risk-free investment with good returns, walk away.

Who should you ask for financial advice:

  1. A person in your church.  If someone seems to have it ‘together’ financially, ask them if they might recommend someone who could give you some financial advice.  When I first moved to a new city I asked the preacher who he would recommend.  I figured he had nothing to gain by making a dishonest recommendation.
  2. A person who will willingly explain the situation to you.  When you ask ‘how’, ‘why’, ‘when’, and ‘what’ questions they reply with a smile, ‘that’s a great question’ and then go on to explain it in a way you understand.
  3. A person who says this is not the product for you or the time for you.  If you meet with a financial planner who says ‘I don’t think this is the best time for you to consider …’ When the time is right go straight back to that person.
  4. A person of integrity.  There are a lot of knowledgeable financial people out there, but there is more to financial advising than knowledge.

On the topic of trust I thought it important to tell you that as of the time of this writing I am not earning any money from this blog.  Often if I ask you to allow me to refer you to something it is because I will receive a benefit from such a referral.  But, let me clearly say, I will not refer you to something simply so I can make a profit. I say this so you will know that the content of my posts is not sales oriented, but service oriented.

Leave a Reply

Your email address will not be published. Required fields are marked *