Your Financial Advisor Should Not Be Your Friend

You meet a financial advisor who is a member of your church or country club. Over a period of months, you gradually get to know the advisor and you are impressed. At some point, you start discussing financial concerns and goals with the advisor. He says he can help.

This may be a form of affinity marketing. That is, the financial advisor joined a group (church, country club), that has common interests, to meet investors. This may seem like a lot of trouble to meet you, but remember the advisor cannot sell you products or services until he meets you and develops an initial relationship. Therefore, he spends a lot of time on strategies that put him face-to-face with potential clients. Bernie Madoff used both forms of affinity marketing – churches and country clubs.

Advisors use a common sales process that works like this. They want you to like them. That makes them your friend. They know you trust people you like. That opens the door to advisor opportunities that create risk for you. Trust makes it easy to convince you they are financial experts. And, trust makes it easy to sell investment products and services. That’s because you do not question the advice of trustworthy experts.

A couple of years later you realize your results do not match the expectations that were created by the advisor’s sales pitch. You have a major dilemma. Someone you like and trust may be incompetent, but you are slow to terminate the relationship. You give your friend more time than you would give a non-friend to fix the problems and improve your results.

Another year goes by and your results have not improved. In fact, they have gotten a little worse. You have run out of patience. It is time to act so you terminate your relationship with the financial advisor. Now, you have an awkward situation on your hands. You see the advisor every week at church or your country club. Your wives know each other and your children play together. At this point you have to hope the advisor handles the termination like a real professional – nothing personal, it’s just business.

Of course if it was “just business” you could have completely avoided the situation by not selecting a member of your church or country club to invest your assets. But, you have to be disciplined enough to keep your money and friends separate. Then you can make objective decisions that are not tainted by friendships and other subjective criteria. Your decisions are always in your best interests and not a friend’s who makes money from your assets.

Paladin Tools & Tips  

The Paladin Research website ( provides more than 30 free tools and tips to investors who use the services of financial advisors. Use Paladin’s Find functions if you don’t know any 5 Star advisors in your community. Use Paladin’s Research functions if you know advisors, but want more facts before you select them. Additional Paladin functions will Monitor and Replace current advisors for you.

Jack Waymire worked in the financial services industry for 28 years before he left to found the Paladin Registry ( in 2004. This investor education website was based on the Principles in Jack’s first book: “Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor.” 
The Registry also has a free service that matches investors to advisors who meet Paladin’s minimum requirements for competence and trustworthiness.

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