Does your Advisor have the right incentives?
Most people would hope that the person they have chosen to trust with their security, future, retirement and family livelihood would have their family’s interest as a priority. Sadly for many families this is not the case.
Financial Advisors, Wealth Managers, and other terms commonly used for Financial Brokers and Dealers often are compensated based on commission. This means they are paid based on every dollar you choose to trust with them. What does this mean for you?
Based on their regulatory standards they can sell any product that is ‘suitable’ for you needs. That DOES NOT mean that this product is going to be in your best interest.
How can I make sure that the person I’m trusting with my Financial Future has my best interest in mind? Make it a legality.
For those who have a fiduciary standard (such as those with a CFP® Designation) must act in your best interest. This standard legally binds the Advisor to act in you and your families best interest.
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The downside to these Financial Planners? They are usually more expensive. Using a mixture of fee and commission based advising, the cost of managing your money is usually higher with someone of this standard. For the Average Joe paying these fees may not be an option, as many Americans can’t afford these higher value services. This leaves the middle and lower class population with a lower likelihood of reaching their retirement goals, ensuring their long term future, and is more likely to leave their heirs behind their peers whose parents could afford these services.
So what solutions are available for the Average Joe to get substantial services at a lower price?
- Research online about different investment and retirement strategies suggested by your Financial Advisor. While this product may be right for some, it may not be right for you. Look and see situation this product is normally used in, and if the value of the product aligns with your needs.
- Ask a friend, or family member who is knowledgeable in finance to review the deal before you sign in. Sometimes an outsiders perspective will bring out flaws, or hidden fees in a document.
- Read the Fine Print
- Don’t sign anything without taking in home and thoroughly reading it. This may sound obvious but many times people will get themselves into a legal bind, or miss a segment, that greatly changes the deal you thought you had.
- Ask about Commissions and Fees
- Ask your Financial Advisors to disclose their commissions and fee base. While there may be additional fees that are held within the product, this is a good way to tell how high their incentives are in closing this deal.
Here are some additional Resources for finding the best Advisor for you:
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