Some Advisors Might Have Agendas

Adam Jorgensen - Monday, April 03, 2017

It seems like no matter where you turn someone is trying to sell you something, and this can be true of financial advisors. With so many financial products and services on the market, and people touting titles such as wealth advisor and financial consultant, the definition of an advisor has become more and more blurred.

To put it simply, the term “financial advisor” covers many different types of advisers that offer many different services.  For example, the same financial adviser, assuming he/she has the proper licenses, may sell you insurance products, sell you securities for your portfolio, sell you advice about how to invest your portfolio, prepare your taxes, sell your home for you and do your estate planning.  In each of these capacities, a financial adviser is compensated differently.  But not all of these capacities requires a financial adviser to act as your fiduciary.  If a financial adviser is not acting as your fiduciary, that adviser is not legally mandated to put your interest first.

 A financial adviser working in multiple capacities may be conflicted.  Conflicted advisers can waste your time and your money.  When it comes to your investments, you deserve an advisor who is looking out for you.  Before taking anyone’s advice here are a few things to consider:

  • Be cautious of anyone claiming to be an advisor, but has an agenda to sell you something.
  • Every program has positives and negatives. If an advisor/sales person hates a program, it is often because they don’t understand it or may want to influence you differently.
  • If someone loves a particular financial program and “all their clients are on it” it is likely the advisor pushes that product because it makes the advisor the most money.
  • Financial professionals might be paid to sell proprietary products for the company named on their business card, and they are held to a suitability standard rather than a fiduciary standard.A suitability standard does not hold an advisor accountable to put the best interest of a client first, but rather to prove the transaction was reasonable.
  • Always ask an advisor the capacity in which they are acting.
  • Always ask the adviser how they are being compensated.

We understand that brokers, accounting professionals, insurance agents, bankers, etc. play a significant role in our financial lives, but we hope you keep the points above in mind as you assemble the best team possible to manage your unique financial interests.

Veracity Advisers is a division of Capital Markets IQ, LLC, a SEC registered investment advisor. 

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by Veracity Advisers, to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered personalized investment advice for compensation.