by Jack Waymire
Categories:
What does it mean if your current advisor is not a real investment expert? It means your advisor mislead you. What should you do the next time a financial advisor says, “I am a trustworthy financial expert?” You say, “I want documented proof your sales claims are true.” You know from experience that you can put more trust in what you see versus what you hear.
Sales Tactics
Why do financial advisors make undocumented sales claims? In a nutshell, the claims help them sell financial products:
- They tell investors what they want to hear
- Very few investors demand proof for sales claims
- The claims are verbal making them easy to deny later
- The truth can cost them business
Mandatory Disclosure
You may be wondering how advisors get away with unsavory sales tactics?
Wall Street has spent millions of dollars making sure advisors do not have mandatory disclosure requirements when they sell financial products to investors. This makes you responsible for asking the right questions and knowing good answers (benefit you) from bad ones (create hidden risks).
This is a winning strategy for Wall Street. Less than 10% of investors know how to determine the quality of financial advisors (Source: Paladin Research).
Game Changer
You already have access to a game changing service. You can use the Internet to research information that validates the advisor’s knowledge and ethics. You are no longer dependent on information that is controlled by financial advisors. You make informed decisions when you have all of the facts.
Validate Knowledge
How does an advisor prove he or she is a real financial expert? They do not have track records. References can be coached to make the right statements. Plus, no advisor will give you a bad reference.
Your best choice is to use the Internet to find information that validates the advisors’ claims for their education, experience, certifications, and ethics.
Do not assume all degrees and certifications are legitimate. Unethical advisors buy fake credentials so they look more knowledgeable than they really are.
Key Words for Ethics
Enter the advisor’s name and the firm name in Google with several combinations of key words that will help you find the information you need to make the right selection decisions.
For example, John Smith or Acme Financial plus keywords: Fraud, lawsuit, complaint, arbitration, bankruptcy, foreclosure, scam, fine, Ponzi scheme, termination, and suspension.
Third Party Information
Financial advisors do not always provide the most accurate information. They have an inherent conflicts of interest – they have to sell you products to make money.
Your best sources are third parties that are not trying to sell you financial advice, services, or products. For example:
- Go to PaladinRegistry.com/About Advisors to find free information that will help you select a real expert
- Go to FINRA.org to view the advisors’ records of compliance
- Go to SEC.gov to view advisor ADVs
- Visit advisor websites to obtain additional information
- Check the media for applicable information
Get the Facts
By now you have probably figured out that financial industry regulatory agencies are not going to protect you from unscrupulous financial advisors. You are going to have to protect your own financial interests.
The more you know the better prepared you are to protect those interests.
Other posts from Jack Waymire
Paladin’s Registry of Financial Advisors is a Free Service for Investors
The world’s first financial advisor directory was the Yellow Pages®. All you had to do was thumb through...
How to Find the Best Financial Advisors
Your first step is to determine the criteria you will use to identify and select the best financial...
What is an Investment Performance Benchmark?
A Benchmark is a performance goal. Your advisor is paid to produce results that beat the performance of...