{"id":8050,"date":"2016-11-14T07:03:23","date_gmt":"2016-11-14T15:03:23","guid":{"rendered":"http:\/\/blog.paladinregistry.com\/?p=8050"},"modified":"2016-11-14T07:03:23","modified_gmt":"2016-11-14T15:03:23","slug":"how-is-free-financial-advice-unsuitable","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/investing\/how-is-free-financial-advice-unsuitable\/","title":{"rendered":"How is Free Financial Advice Unsuitable?"},"content":{"rendered":"

We’re lucky to live in the information era. Anything we want to know is at our fingertips via the internet, television programs, and even podcasts and radio shows. Which is why you don’t need a financial consultant, you can simply educate yourself for free via media channels. Good plan, except media talking heads are incapable and even disallowed from offering advice. They might have impressive credentials and stellar ratings, but actually those financial advice programs are geared only towards selling advertisement, not solving problems or even answering your financial questions.1<\/sup> The hosts only hear a snippet of a financial problem, they simply do not know enough about you<\/u> to comply with the \u201cKnow your Customer\u201d rule. They do know this, as do their lawyers; which is why their solutions are often unsuitable or inappropriate and include fine print warnings.<\/p>\n

Know Your Customer <\/strong><\/p>\n

Watch a TV show, listen to a radio show, or peruse a website geared towards giving free financial advice. They all have fine print disclaimers indicating that the audience members should ignore the presented advice and instead discuss their individual situations with a financial advisor. Huh? It seems backwards to offer free financial advice only to say, “By the way, don’t listen to me!” That fine print warning serves as protection for the talking heads if someone does follow their advice! Some websites even charge you for information and then tell you to go ask someone else!2<\/span><\/p>\n

Investment professionals are held to the Financial Industry Regulatory Authority’s (FINRA’s) \u201cSuitability\u201d rule<\/a><\/span><\/strong>. This rule requires investment firms, advisors, brokers, financial consultants, and any one handing out financial advice involving registered or exempt securities to have “a reasonable basis to believe that a transaction or investment strategy involving securities that they recommend is suitable for the customer.”\u00a0This means the advisor needs to have a good grasp on a person’s financial situation before he advises him or her to invest in any security including mutual funds, stocks, bonds etc. The suitability rule is why advisors want to know information such as:<\/p>\n