Five signs that your Independent Financial Advisor is harming rather than helping you

The advisor doesn’t have the right credentials

Certified Financial Planner and Investment Advisors must follow certain standards and know the right regulations. They need to have passed a lot of tests to gain their CFP certification. If they do not have this certification then be wary. A way to check is to phone the Certified Financial Planner Board of Standards to check.

They won’t put anything in writing

Advisors promise to act as a fiduciary to their clients. This is not just a verbal promise, but should be written down. They need to state that they will disclose any sorts of conflicts of interest, plus disclose how they are to be paid. If the advisor doesn’t give you this, then you should be suspicious.

They are paid vis commission or you don’t know how they are paid

The written pledge should include how the advisor is paid. The best advisors are fee only, meaning they get a flat fee no matter what may happen, whether investments go up or down. If they are paid by commission, they could push the most expensive products towards you and therefore will not be taking your best interest to heart. If you are unsure how they are paid then you should ask directly or perhaps walk away.

They are forceful with products, rather than asking questions

It is usual for a financial advisor to show you some of their company products however; if that is all they talk about, then you should be careful. If the advisor is pushy or asks you to invest more money into the same products, then they may be doing you more harm than good. A good financial advisor should ask you questions instead of pushing products at you.

The advisor cannot show you their financial strategy or back it up with research

All advisors should have an Investment Policy Statement that shows how they are making investments decisions on your behalf. They should also have a written plan for rebalancing your portfolio in troubled times. Plus, this strategy should be backed with academic research about investing. While no one can predict the market, a good advisor should ‘be in the know.’ If they are making up numbers or tell you that their strategy is a ‘secret’ then it’s time to find another advisor.