How Independent is Your Financial Advisor? This is a very important question as it is only a truly independent Financial Advisor that can provide you with unbiased advice, therefore the best advice. Imagine you were in the market for a new home, you would want to work with a real estate agent who showed you every home that met your list of wants and needs, not just the ones listed by the company he worked with.
A home is a huge investment to make and anyone would want to see all the available options. So why are some people trusting their entire financial future to people who may not be showing them all of their investment options because they work for a firm that only allows them to recommend their products?
How Independent is Your Financial Advisor?
The Captive Advisor Trap
Big brokerage companies have plenty of money for expansive marketing programmes. They can spend lots of money on TV advertising, sports event sponsorships, news story placement and so on, and some people naturally feel that this all means they will be getting the best possible advice if they choose a financial advisor from one of these firms.
What they rarely realise is that that financial advisor may be a captive advisor. This means that as nice, and knowledgeable, as he or she might be they are contract bound to only recommend products offered by the firm they work for.
This means that while the products they offer are probably fine for their client’s basic needs, they are not showing them all the options available. They will almost certainly tell you the products you are being offered are the best, but they are biased. And not held under the more stringent fiduciary standard, which says the adviser must act solely in the client’s best interests that a truly independent financial advisor is.
How Independent is Your Financial Advisor?
Getting the Whole Picture
Truly independent advisors offer investment products from a number of companies. Their loyalty is to their client, so it is their job to provide not only objective, knowledgeable advice but to all of their client’s options on the table and then help them decide which are right for their unique situation.
How can you tell if an advisor is independent? It can be hard, especially as they may go by a number of different titles. One way is to come out and ask, directly. Any professional is legally bound to answer honestly.
If you are still at the Internet shopping stage – researching your options before making any calls – reading the fine print is a must, as any interests that affect advising decisions should be listed there.
Of course, the most important thing is to find a financial advisor you trust. Your adviser should be capable of explaining why he picked a particular fund or strategy and whether there was a commission involved or some other motivation for the choice. If they are truly independent, there will not have been.
Planning for your financial future is a must, no matter how much you earn or at what stage of life you are at. Getting the most objective advice from an Independent Financial Advisor is one of the best ways to ensure that your money will be working as hard as it should to help you reach your goals. Speak to us at Sweidananco.co.za and ask us for truly independent advice from one of our truly Independent Financial Advisors.
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