Honesty is the best policy

Honest Financial Advice – Integrity is everything

Doctors, lawyers, and certified public accountants are legally required to act in the best interests of the people they serve.

There are more than 200 different designations for financial advisers, including “financial consultants,” “wealth managers,” “financial advisers,” “investment consultants,” “wealth advisers,” and — in case that doesn’t sound exclusive enough — “private wealth advisers.”

Less than 10% are legally obligated to put your interests first at all times on all of your accounts. These are called “Independent Financial Advisers” or IFA’s for short. IFAs don’t accept sales commissions. Instead, they typically charge a flat fee or a percentage of your total assets for unbiased financial advice. It’s a cleaner model that removes awkward conflicts of interest and hidden agendas.

As for the other 90%, they’re simply brokers in disguise. Many of them work for enormous High Street banks, brokerage houses, and insurance companies — the kind that splash their names on sports arenas.

Why does this matter? Because brokers have a vested interest in hawking expensive products, which might include actively managed mutual funds, whole-life insurance policies, variable annuities, and “wrap” accounts.

Don’t get me wrong, this is not an indictment on the good people that work in the industry, a vast majority of their colleagues — are people of real integrity. They have good hearts and good intentions. The trouble is, they work in a system that’s beyond their control — a system that has tremendously powerful financial incentives to focus on maximising profits above all else.

Make sure to ask these seven questions of a financial adviser, or any adviser, you are considering:

Tony Robbins: 7 questions you must ask to keep a financial adviser honest

1. Are you a registered investment adviser?

If the answer is no, this adviser is a broker.

2. Are you or your firm affiliated with a broker-dealer?

If the answer is yes, you’re dealing with someone who can act as a broker and usually has an incentive to steer you to specific investments.

3. Does your firm offer proprietary mutual funds or separately managed accounts?

You want the answer to be an emphatic “no.” If the answer is yes, then watch your wallet.

4. Do you or your firm receive any third-party compensation for recommending particular investments?

This is the ultimate question you want answered. Why? Because you need to know that your adviser has no incentive to recommend products that will shower him or her with commissions, kickbacks, consulting fees, trips, or other goodies.

5. What’s your philosophy when it comes to investing?

This will help you to understand whether or not the adviser believes that he or she can beat the market by picking individual stocks or actively managed funds.

6. What financial planning services do you offer beyond investment strategy and portfolio management?

Ideally you want an adviser who can bring tools for tax efficiency in all aspects of your planning — from investment planning to business planning to estate planning.

7. Where will my money be held?
Ask us

1st Financial Foundations are Independent Financial Advisers we help our clients to manage risk, we don’t just sell products. Listening to our clients individual needs and acting in their best interests is most important. Contact us on 01908 523 420 or email info@ if you would like to book a Free Financial Review today.

Source: Tony Robins 7-questions-you-must-ask-a-financial-adviser