All Financial Advice Is Not Created Equal
As you visit with your financial advisor, whether it's a long-standing relationship or your first appointment, there are a few things to keep in mind regarding the advice that you receive.
Good Advice Won't Promise You'll Get Rich
Any advisor who promises you the moon and stars should really be avoided. Making those kinds of promises, or insisting that they always have returns that beat the market, simply isn't realistic. Instead, they should be clear and direct about how well they generally do, and what you can logically expect to receive from their efforts. They can't make predictions that are 100% accurate, but they should have a good idea -- and that idea shouldn't be to oversell their prowess or capabilities. If it sounds too good to be true, it probably is.
Good Advice Doesn't Have to Come With High Commissions
There are many products available for investment today, and some of them have more commission requirements than others. If your advisor is trying to sell you something that's a bank product, and it comes with high commissions that they will receive from you, it might be bad advice. That's not to say that there won't be any commissions with good quality products, but there are plenty of low-commission products that are good investments. Taking a careful look at those kinds of products will help you get the best product for your needs, instead of something that puts money into your advisor's pocket.
Good Advice Isn't Free -- Or Even Cheap
You can't realistically expect your advisor to work for free, or for less than they are actually worth. If you get cheap or free advice about investing, it's worth exactly what you paid for it. Keep that in mind when people want to suggest to you what they did to make a lot of money, or when they have the next big thing they want you to buy into. It could be valuable, but it also might be something that isn't a good choice and that will put money in their bank account and not yours. If you want good advice, you'll have to pay for it. There's nothing wrong with that.
Good Advice Isn't Confusing
If your advisor has you confused about what you're supposed to be doing, you need a new advisor. Good financial advice should be easy to understand, and should make sense to you. Additionally, your advisor should be able to answer your questions and explain their ideas to you. If they can't do that, you'll want to work with someone who can. It's important to trust your advisor's expertise, but you should also be kept in the loop with the ideas they have and the choices they're making to help manage your money. That's an important way for you to focus on building a stronger financial future, and it's much easier to do when you're comfortable with what the advice you've been given really means for you.
Good Advice Puts the Client First
The best advice you're ever going to get about your finances is advice that puts you first. If your financial advisor is more focused on helping themselves than they are on helping you, making a change of advisors can be important. A financial advisor with fiduciary duty is legally bound to put their clients first, but the problem with that is that not every advisor is required to be a fiduciary. Choosing one that is can help protect your interests both in the short term and the long term, so you're better able to keep your finances on track and moving the way you'd like them to. Make sure your financial advisor has your best interests in mind.
As I always say, there's no right or wrong in financial planning, but rather appropriate or inappropriate based on your unique situation. Just remember that all advice is not created equal, and make sure that the advice you are receiving is the most appropriate for your future success.
This content created by Rick Durkee in conjunction with Fusion Capital Management.
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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by radical promoting and their editorial staff based on the original articles written by jeff cutter in the falmouth enterprise. This article has been rewritten for Rick Durkeeand the readers of Rick's Weekly. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.