Who does your financial adviser work for?
It’s the most important question you need to ask yourself about a financial adviser to ensure you entrust the right person or firm with your finances, your future prosperity and ultimately the quality of your life.
My personal comprehensive financial planning service is unbiased, conflict free and 100% transparent.
I do not recommend you purchase any financial products, but rather provide an educational and informative service to help you make sense of your money and take control of your wealth.
I’ve developed this service because I want to sit on your side of the table and help you navigate the unnecessarily complex, frequently conflicted, and frankly all too often corrupt and greedy financial system.
I work for a transparent and explicit fee that comes directly from you as my client and I solely work in your own interests.
Stating it obviously, I work directly for the people who pay me.
This is what it means to operate independently of the financial and insurance companies.
Many other financial advisers say they work in your interests, and many still advertise themselves as independent, but despite the removal of commission in regulated financial advice, the model for many firms is still very much transaction based and product based and therefore the advice remains too often conflicted.
(Disclaimer: There are lots of good firms and advisers out there, but there remains far too many that are grossly conflicted).
If you have to move your money to the financial advisory firms products, are you really that surprised when there are multiple reasons found to move your funds? It’s the only way the financial adviser you are working with is going to be paid for the time spent with you.
Not only do you have to be careful with regulated financial advice, but you have to be incredibly vigilant against financial promoters operating outside of the regulated financial landscape.
There are truly schemes and financial products that shouldn’t be touched with your worst enemy’s barge pole.
These financial promoters will be selling things like alternative investments and off-plan property. Often in exotic (questionable) locations of the world.
I’m not saying that all of these will lose money, but many will and they are promoted in an aggressive manner, convincing you of the merits without due regard or consideration for the possible risks or your personal situation. When you understand investing, you know that any asset can be a good or bad investment. But there are three things you need to consider when investing personally: price, risk and your portfolio.
Price: Are you paying an attractive price for the asset? You could say that there isn’t a bad investment, but there is frequently a bad price.
Risk: How much are you prepared or can afford to lose? What types of negative features does this investment contain? (Clue – every investment has some negative features, with some containing far more than others).
As a short, but not exhaustive list, you should consider the following:
- What is the risk of fraud?
- What is the likelihood of bankruptcy?
- How much debt is the company taking on or fueling the asset.
- What are property ownership rights in the investment’s jurisdiction?
- What are the tax considerations?
- What is the prevailing and future trend of the political environment?
- How liquid is the investment (is there a large pool of professional investor capital available and interested in this market, would it take months to sell, or could selling become an impossibility unless for giveaway prices.
- If investing globally, what are the currency and inflation risks?
To gain an understanding of all the different types of risks that you need to consider when investing, you should read my e-book ‘Don’t Lose Your Shirt’. If you don’t understand what you are getting into, you are investing through luck and the chances of losing money, damaging your prosperity and possibly even losing your shirt are quite high.
Your Portfolio: How does the investment fit in with your overall portfolio? Your portfolio should be established with a thorough understanding of your own risk profile and lifestyle needs. If you don’t first consider this and then consider how your investment relates to your overall portfolio, then you can become over concentrated, or you could purchase something that is entirely inappropriate for your needs and goals.
The problem with this type of product promotion
The public will view these people as financial experts, advisers, wealth coaches, wealth creators, financial planners etc. (whatever the title used), and mistakenly assume they are offering expert and unbiased advice that is in their own interests.
The problem is the promoters essentially earn money out of the back door, rather than through the front.
My service earns money through the front door. You pay me to work solely in your interests. Nobody else pays me a penny. So my financial interests are clearly aligned with your own. The following scenario should help explain the problem of this set up more clearly.
Imagine you are in a room with two doors.
You don’t know which door to go through, but don’t worry, there’s an expert in this room who is going to ‘help you’.
However, what you don’t realise is that they receive £10 to send you through door one, but £100 to send you through door two.
Which door do you expect you will be sent through?
Kind of obvious isn’t it.
Now let’s put this into a real financial perspective. The earnings from door one and door two are now £100 for door one, or £10,000 for door two.
The person helping you in this room is your financial adviser, or wealth manager.
Knowing that this is the payment terms for your ‘unbiased, independent advice’; would you truly trust them with your finances?
Many people simply don’t know this and understandably base their decision to trust someone on more superficial reasons such as whether they dress smartly, whether they are friendly, whether they happen to know your children’s and pet’s names. These are all sales tactics. They have no effect on whether this person is working in your own interest.
I find it incredible how many people within financial services fail to see how wrong this approach is.
The only conclusion you can logically make from this is that people are far more concerned with their own self-interest, than doing the right thing. Either that, or they simply don’t understand.
Neither is acceptable from a consumer perspective.
This is one of the primary reasons why you need to learn to take control of your own wealth.
“The prince who will not undergo the difficulty of understanding must undergo the danger of trusting.” George Savile, 17th century English statesman.
Sure, learning about how to manage your finances can be daunting and confusing, but I can assure you of two things.
- About 80% is unnecessary complication and you can be successful concentrating solely on the 20% that is sensible and understandable. (A cynic may suggest that much of the complication is designed purely for you to not understand what is going on and therefore to get you to pay high fees . . .).
- It’s too dangerous to solely trust others as it’s been proven time and time again that financial types can’t be trusted.
You shouldn’t even trust me entirely. It may sound strange for me to say this but logically you shouldn’t. I may make mistakes, or I may misunderstand your situation or goals if you are not fully involved and engaged with the process. Don’t delegate responsibility. It’s your money after all, not mine. If you don’t understand something, ask. If you don’t feel comfortable with an idea or approach to your wealth, then speak up. Any financial plan I make for you has to be your approach. You can only use my financial skills and knowledge, and hopefully a little wisdom, to help you construct a financial plan and strategy that is in your interests. This means you have to be involved and fully engaged in the process.
Be careful whom you trust. Question everything. Don’t leave your future in someone else’s hands. Your future prosperity is too important.