One of the most difficult aspects of personal finance is finding a financial advisor or representative that you can trust. This financial professional should be a teammate that coaches you along and helps you achieve your financial goals and doesn’t make you a sales target.
In the financial world there’s two types of financial advisors/representative, those that are client focused and those that are product focused. Client-focused advisors structure their advice around you, and product-focused advisors just focus on selling you products and don’t care about your financial goals.
Recently, banks have taken a lot of public criticism about their product-based sales target practises. News outlets like CBC have investigated and reported extensively on these topics and demonstrated how this has damaged client’s finances.
So how can you protect yourself from becoming a sales target? Thankfully, there’s a bunch of big red flags that we can watch out for.
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How Do They Treat You?
You deserve the best. You want an advisor to give you their full attention and respect. You may want to think about moving on if they don’t listen to your needs, fail to phone you back, or frequently cancel appointments.
Care About Your Financial Goals
Once you have their attention, they should ask you a lot of questions about what’s important to you and fully understand what YOUR financial goals are. Financial goals are the foundation of every financial plans and it’s a very worrying sign if they start recommending products without even knowing what you want to achieve in life.
A good advisor will centre on your financial goals and will listen to your whole life story before they even start making product recommendations.
For those that want a refresher on financial goals, here’s a past article.
Care About Your Needs
Your financial needs are also very important, these include desired risk, usage of ethical investments, access to funds, and more. Your financial plan should incorporate your needs to harmonize your beliefs to your personal finances.
A product-based advisor will skim over your needs or even try to push you into doing what is not best for you. If you agree, you’ll likely become stressed and resent personal finances.
A big example of this is when an advisor tries to push an individual into a risky investment that they feel very uncomfortable with.
Understand The Best Products For You
A strong advisor must also know what products are suitable to your financial goals and needs. The last thing that you want is for an advisor offering an investment that makes it harder to achieve your financial goal.
Disclose Fees and Conditions
Financial products have lots of fees and conditions. Therefore, a good advisor will clearly disclose all of these to you AND make sure that you are clear what you’re paying for.
Unfortunately, many branch advisors are rushed and may glaze over important details like payment restrictions, annual fees, product risk, and much more. Some of the financial products that advisors glaze over is mutual funds, mortgages, and insurance.