Your Retirement Matters
Financial advisors come in all shapes and sizes, but a good advisor will never leave you high and dry. A financial advisor needs to support the needs of their clients and should never make investment recommendations based on a desire for personal sales commission. They need to work for the client’s needs, in order present them with investment options that meet the client’s life goals.
A bad advisor may be very friendly, but without morality and a sense of personal responsibility for the client, they aren’t serving anyone but themselves. Investment firms that hire advisors on sales commission, seek out people that have the right sales presence to trick people. This makes it hard to identify a bad advisor without taking into account common indicators. This article will help to reveal what type of advisor you are dealing with, so that you can get the quality financial advice that you deserve.
Does Your Advisor Care About You?
If a financial advisor really cares about your retirement planning, then they should also care about you. Have they assessed your personal investment risk to determine which investments are suitable to your needs? Do they ask you about your retirement plan? Have they provided you with time to ask them questions and review your accounts?
A good advisor will be sure to do all of these things. After all, an advisor is someone that advises, not someone that tells you what to do with your money. They need to work within your lifestyle and match your personal investment needs. If an advisor isn’t taking steps to help you, then their motivation for taking on clients is questionable. Good financial advising is a two way street with open communication, not an advisor taking control. Some bad advisors will continually assert that they are experts in their field, in order to silence opposition to their investment proposals. A good advisor will be sure to listen to any questions and concerns you have, in order to provide you with exactly what you are looking for.
Bad Financial Advisors Can Be Popular
Unfortunately, many advisors that act based on their own self-interest are friendly people. They are hired for their appearance and personality in order to fool you. This type of advisor is given profit incentives by their investment firm to sell particular products. They are less likely to discuss investment risk and whether or not the investment they recommend is insured. Their primary skill set may be closer to a salesperson than a financial advisor.
All advisors sell products to produce income and benefit their clients, but a good advisor won’t act against their client’s best interests. Oftentimes, an advisor’s intentions can be determined by the way they share investments with clients. Does your advisor provide you with a holistic view of an investment, or simply a short sales pitch? Are they open to your questions, or do they seem eager to make a sale and move on?
There is a certain amount of subjectivity or ambiguity when it comes to judging the motivations of others, so we can’t give you a concrete recipe for evaluating your advisor. Thankfully, the way advisors make money can also reveal a lot about what kind of business they want to be a part of.
Good Advisors Don’t Need to Make a Sale to Stay in Business
When you work with a fee-based advisor, they are paid to give you advice. These fees can be paid hourly, as a one-time payment, or as a percentage of assets managed.
Advisors that charge a fee are more likely to have your best interests in mind, because they:
1. Are reputable enough to charge for their financial advice
2. Don’t provide you with advice for the purpose of obtaining a sales commission
You are much more likely to obtain quality financial advice from an advisor that provides a fee-based service. Advisors that don’t charge fees are trying to make money with your assets, sometimes using reckless investment tactics. Don’t waste your time on someone that gives a sales pitch without looking at your portfolio. Good advisors have clout from doing things right for their clients and seek to offset industry risks associated with providing financial advice. If someone provides financial advice without charging a fee, make sure they are a fiduciary.
Fiduciaries Are Required By Law to Work For Their Client’s Best Interests
When you work with a fiduciary, they are legally obligated to provide your with beneficial financial advice. These relationships are built on mutual trust and respect. Fiduciaries are held to the highest code of morality in the financial industry and they are even obligated by law to act in your best interest when it doesn’t favor them. This can result in recommending products that provide fiduciary advisors with little or no personal profit.
Fiduciaries must provide full disclosure, without misleading clients or acting against their best interests. They are even obligated to disclose a potential conflict of interest and cannot use client assets for their own personal benefit. Unfortunately, only fiduciaries are held to this ethical standard in the eyes of the law.
In Retirement, Most of Us Can’t Take Big Risks
When we’re younger, we have a longer investment horizon. As a result, some investors choose to take bigger risks, because they have more time to recover after a loss. No one invests with the purpose of losing money and if income primarily comes from a nest egg, we may not have additional income to replace a loss.
When it comes to the safety of our investments, we don’t want to work with someone that is taking big risks for their big commission. That isn’t how advising is supposed to work. No one wants to run out of money in retirement, but it still happens all the time. Luckily, most good advisors also hold themselves to the fiduciary standard.
We Follow The Fiduciary Standard
At The Retirement Instructor, we don’t let commissions direct our client’s portfolios. Scott Campbell, RICP is a Retirement Income Certified Professional and follows the fiduciary standard of care. Every client is special and important to us. We do our best to satisfy client needs and provide them with a stable stream of retirement income. We have been in operation for 21 years and although we have many tried-and-true investments, we always make sure they are good for our client’s needs.
But don’t take our word for it. Scott has been named a Five Star Wealth Manager for being one of the best in client satisfaction for 5 years. He loves helping our clients succeed and teaching retirement classes in the Austin area. Watch this video to learn more about Scott:
We don’t ruin relationships for sales. We assess our client’s personal investment risks early on and work with them every step of the way. We are here to boost your retirement income and enable you to live your best life, not to make a quick buck. We work with people to meet their needs, not the other way around.