“The key takeaway, then, is to look for a firm that has your best interests at heart. In short, you need an adviser, not a product salesman.
Don’t be afraid to ask difficult questions. For example, How are you paid? Do you receive commission for the funds you recommend? And how do you ensure that clients receive good value for the investment costs that they incur?
Also make sure that the adviser you are considering hiring believes in proper financial planning. “Financial planners,” says Mark Minchin, “invest time in getting to know each client’s situation — understanding their needs, goals and aspirations. This is time consuming, clunky work. It isn’t scalable like the product side of the industry is, so the advisers who truly invest in this aspect are likely to have the right motivations.”
Check as well that it isn’t just portfolio management that the adviser is offering. Ask them, Do you offer tax planning? What about estate planning? Can you help our family to pass wealth smoothly from one generation to the next? Can you devise, and manage, a philanthropy strategy for us?
Finally, if you aren’t convinced that the adviser you’re speaking to is genuinely independent, is thoroughly competent, and works to the highest ethical and professional standards, walk away and find an adviser who is.”
This section is from an article by Robin Powell for a firm of Australian Planners. The title explains that ‘Sharks still lurk”
In the UK, its the same. There are many firms, like St James Place, Brewin, Tilney etc that are not independent. They are called ‘restricted’ advisers. All these firms have one purpose. To persuade you that they should manage your money. They do so with great rhetoric. If you asked them will they act in your best interests? Do you think they would say, No!. Of course, not, if they did, you’ll end the conversation. If you ask some of the questions above, such as “Do you offer tax planning? What about estate planning? Can you help our family to pass wealth smoothly from one generation to the next? Can you devise, and manage, a philanthropy strategy for us?” They will Yes they can. Why, because saying Yes leads them to the goal of managing your money. Don’t get me wrong, they should not lie to you. Instead, they will use language that gives answers you often want to hear.
Most of these firms employ salespeople. The goal of the salesperson is to capture your investable assets. They will use whatever guiles to persuade you they are the right ones for you.
Instead, be more thoughtful in the questions you ask to help you decide the type of service you need.