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The world of investment advice and financial planning is full of problems. Things like conflicts of interest, obscure disclosures and an overall lack of transparency leave consumers feeling confused and uncertain. Big name firms are allowed to act in their own best interests, with little regard for the individual accounts that prop up their trillion dollar portfolios. As these problems have become more and more evident, it is critical for consumers to become more educated about who their money is invested with, and what they are paying for those services.
1. Most financial planning firms are NOT required to act in your best interests
This comes as a shock to most of our clients, who think that engaging in a contract with a large, well known financial planner means their money is safe. In reality, these brokers aren’t required to show you anything more than they want to show you, and often hide fees and account management charges from the summary they give you every quarter. Not only that, but they are under no obligation to justify the charges, or the reason your money is in one investment fund and not others. This lack of transparency allows big companies to engage in almost predatory behavior, slowly chipping away at your invested funds with little scrutiny and even less recourse for clients.
2. Financial Advisors are being paid more to sell you certain products
3. The amount of attention they give you is based on how they’re paid
We want to assume that the person handling our money is giving us the attention we deserve, but often times the funds are front loaded with fees, which means they get paid upfront, and get very little return for managing or monitoring your account. This also means that the accounts that have more assets under management get more attention than the accounts that aren’t worth as much. Many investors and financial planners will make decisions will make bulk decisions for several accounts at once, to save time and energy. This also means that your account might not be given the attention it deserves, and the funds it includes might not be the best for you.
4. No broker can legally promise a better return on your investments
Brokers and planners love to tell you that your money isn’t doing enough for you, or that they can get better returns in different funds or investment vehicles. Not only isn’t this true, it’s actually against the financial regulations to promise any sort of return to a client. We can show you want the predictions suggest, and the likely scenarios for your investments over time. But you shouldn’t trust any financial advisor or stock broker who tries to tell you that they can guarantee a return on your investment. It simply isn’t true.
5. There is more to financial planning than saving money for the future
Often times, clients consider investing and saving for the future the same thing. Cookie cutter companies have simplified financial plans that fit people into one-size-fits-all boxes, with little to no customization or concern for your personal needs. A real financial planner ought to take a holistic view to managing your financial future. Things like education, family planning, estate planning, insurance coverage and others are all part of having a stable and protected financial future. Put your faith in someone who can see the whole picture, not just the parts that make them the most money.
Financial planning can be a difficult and confusing industry to try and navigate, made even more challenging by the importance of the decisions you’re making. Put your financial future in the hands of people you can trust, wealth manages who have your best interests at stake, and who take the time to educate you on what they’re doing with your money and why they’re doing it.