5 Tips for Rating the Quality of Financial Advisors

One of the most dangerous decisions investors make is determining the quality of financial advisors when they select them. Why so dangerous? If they make a mistake they will suffer dire financial consequences for the rest of their lives. What is more serious than that?

Everyone is a Financial Expert 

Financial advisors use personalities and sales skills to convince you they are financial experts whether it is true or not. They know you want experts handling your assets and they also know you do not question the recommendations of experts. If they can convince you they are experts they can sell you the investment and insurance products that make them the most money.

Tip #1: Undocumented sales claims are worthless. Trust what you see and not what you hear. What you hear is a sales pitch. Documentation increases the accuracy of information because you have a written record. 

Fake Track Records

Financial advisors do not have legitimate track records. They make numbers up so they sound like financial experts. For example, they show investors the performance of hot mutual funds and claim they bought the funds before the performance occurred. This is an outright lie 98% of the time. They selected the funds after the performance occurred – anyone can do that.

Tip #2: Undocumented sales claims are not track records. 

Coached References

Other financial advisors will refer you to current clients who tell you their performance. This is also a deceptive sales practice and even if it was true there is no guarantee future performance will be the same or better than past performance.

Tip #3: Comments by references do not mean much. No advisor will give you a bad reference and most references have personal relationships with their advisors.

Mandatory Disclosure Requirements

If the deck is not stacked in the favor of financial advisors enough already, they also do not have mandatory disclosure requirements. That is, they do not have to volunteer information that would cause you to reject their sales recommendations or fire them.

Tip #4: It is your responsibility to ask the right questions and know good answers from bad ones. This is where Paladin can help. We ask the right questions for you, we rate advisor responses, and we document their information so you have a permanent record.

Rate an Advisor

One free function, no registration required, on www.PaladinRegistry.com is Rate an Advisor. There are 10 questions that help you determine what you do and do not know about a prospective or a current advisor.

If you determine you do not have adequate facts, before you make a decision, open a FREE Paladin User account and select the Advisor Research tool titled Request for Information. We will gather the data for you, upload it to a tool that enables you to compare multiple advisors to each other, and produce a peer group quality rating that is based on the advisors’ responses.

Tip #5: These Paladin tools help you determine what you do and do not know about advisors. Additional tools help you fill in the blanks so you make the right decisions and protect your financial future.

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