Warning! Your Financial Advisor Is Not Your Friend! - David C Figueroa's Blog
David C Figueroa's Blog

Warning! Your Financial Advisor Is Not Your Friend!


How To Choose A Financial Advisor That Acts In YOUR Best Interests

Often times, we will go to a financial advisor because they are the so called “experts” and we know for sure that they will have our interests at heart.  Right?  Well the truth is that they are likely to recommend actively managed mutual funds that under-perform the market 96% of the time.

These mutual funds often have astronomical fees that could eat up 70% of your future nest egg!

Furthermore, most financial advisors abide by the rule that says, “do as I say, not as I do.”  According to a 2009 study by Morningstar in tracking 4,300 managed mutual funds, it was discovered that 49% of the managers owned no shares in the fund they managed.

The remaining 51% only owned a token share.  If the people who manage the fund aren’t investing in the fund they manage, then why should you?

Here’s another shocking fact. . . 46% of financial planners have no retirement plan according to the Journal of Financial Planning!  If they can’t manage their own financial future, then how can you trust them to manage yours?

Did you think that they were looking after YOUR best interests?  Think again!  90% of all financial advisors in America are brokers.  Brokers don’t have to recommend the best investment products for you.

Brokers get paid a fee or commission for selling products.  They are most likely to recommend a product that pays them a more lucrative commission, not necessarily the product that provides you more income.

Why would you hire a financial advisor that doesn’t have to act in YOUR best interests?

5 Key Criteria for Selecting a Financial Advisor

  1. Make sure the advisor is registered with the state or the SEC as a  ‘Registered Investment Advisor’ or is an investment advisor representative (IAR), or a registered investment advisor (RIA). Make sure this advisor is NOT wearing two hats.  They should not be a broker and also a Registered Investment Advisor at the same time.  They should not be members of FINRA and SIPC.  If you see that their business card or website has these letters, it means that he or she can act as brokers.  If so, run for your life!
  2. Make sure the registered investment advisor is compensated on a percentage of your assets under management, not for buying mutual funds.  Make sure this fee is the only fee and is completely transparent.  Be sure there are no 12b-1 fees or “pay-to-play” fees being paid as compensation.  Don’t work with a firm that offers Proprietary Mutual Funds or Separately Managed Accounts.  They could be steering you into products that are highly profitable for them!
  3. Make sure the registered advisor does not receive compensation for trading stocks or bonds.  Don’t work with a firm that receives any Third-Party Compensation for recommending particular investments.  This is a way for them to pad their commissions or get kick-backs.
  4. You don’t want to just give the money directly to your advisor.  Make sure that your money is held with a reputable third-party custodian, such as Fidelity, Schwab, or TD Ameritrade, which offers 24/7 online account access and sends the monthly statements directly to you.  This protects you from the danger of getting fleeced by a con man like Bernie Madoff.
  5. A good place to get conflict-free advice and portfolio options is at: http://www.PortfolioCheckUp.com

Another good resource that Tony recommends highly is http://www.getasecondopinion.com

Reference:  Money-Master the Game, and Unshakeable by Tony Robbins

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David Figueroa- Success Coach

*This post may include affiliate links. If you buy something through one of those links, I may earn an affiliate commission at no cost to you. I assure you that if I recommend something, it is because I believe it will be of great benefit for your personal development and success. I need wine! Thanks!

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About the Author David C Figueroa

David C Figueroa is a psychologist with over 35 years of experience teaching personal development. An awesome success coach, and internet marketer. Now retired, he has refocused his goals into helping network marketers grow their businesses online.

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