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Everyone has heard stories about big celebrities (Sting, Rihanna) or athletes (Kareem Abdul-Jabbar, Floyd Mayweather) being used by financial advisors.
Sting’s financial adviser was jailed for six years for stealing $1.6 million from him, and Abdul-Jabbar lost millions of dollars when his adviser used his money for suspicious real estate transactions. Rihanna settled a lawsuit against a former accountant who spent millions of dollars, and Mayweather’s money woes were almost TKO.
It happened to the biggest star, and it happened to the little star.
It may happen to you.
Due to the poor reputation of some financial advisers, people usually choose carefully who will assist them in personal financial management. But if extremely wealthy people make mistakes, then people who are important to every dollar also make mistakes.
You took precautions when choosing your financial advisor, maybe you even used Our Five Questions Guide In the process, I hope you are very satisfied with your financial handling.
Pay attention to these 6 red flags
If you have any questions about how your financial advisor works, here are 6 signs to determine if you are receiving the correct form of financial advice.
1. Suspicious or unclear payment plan
Obviously, financial advisors charge for their services. They can make a living, right?
However, if you are not sure how much to pay him (if your payment comes from your account with the consultant), or if you do not understand all the fees shown on your statement, you need to ask questions.
If we assume that most financial advisers are striving to be upward and upward, they will fully explain their expenses. If you tell them that you feel you have paid too much, a good consultant will discuss with you ways to reduce costs while still getting the services you need.
If your consultant cannot fully explain his expenses, or if he earns commissions from the products or services you invest in, you need to do some research.
Any attempt to avoid explaining fees and services is a red flag. (Many commission-based investments disappeared after the Great Depression, and most of the payments you made to consultants may be fees).
2. Negotiation costs are taboo (the consultant said)
There are usually two types of platform consultant fees: hourly-based fees or fees based on the percentage of assets under management.
Hourly fees may be difficult to understand, but you should encourage your consultant to explain them. Asset management-based fees are usually more expensive, at least on the surface, but you can ask your consultant if there is a way to reduce your costs.
If your adviser is hesitant to any of these conversations, you may want to consider finding a financial adviser who is more responsive.
3. It is difficult to get a direct answer
Will your financial advisor respond to your attempts to communicate with him or her? When you contacted your consultant, did you feel that he or she was really listening to you? Has your consultant ever avoided communicating with you?
When you are worried about the consultant’s communication habits, trust your instincts. Remember, in this case, you are the boss.
You can certainly evaluate your advisor’s listening habits by looking at your account management methods. Are there any fees or services that you don’t know about?
In this case, it is wise to keep all account records provided by your financial advisor or provider and check each other from time to time. Are you paying for too many or too few transactions? Is your account as active as you wish, or is it as passive as you wish?
Of course you tell your consultant how you want to handle your finances. If he or she does not follow your wishes, even in minor ways, you need to have a conversation.
4. Bad handwriting on the street (or on the Internet)
Hopefully, before you start working with your financial adviser, you have investigated his legal history. This is easy to do.
This Securities and Exchange Commission Investment Advisors Public Disclosure or Finra BrokerCheck Allows you to insert the consultant’s name into the search engine, and it will notify you if you have any complaints against your consultant, whether it is from a consumer or a provider working with that person.
Suppose you checked these accounts when you first registered. It is wise to check again from time to time. In the past few years, there may be some things you need to know.
This is not disloyal: remember again that you are paying close attention to the person you commission to ensure the safety and growth of your personal finances. It is wise to know that your consultant is not carrying any new regulatory baggage.
5. You feel pushed around
Based on your risk tolerance, you want the advisor to find new and better ways to invest or protect your funds.
However, if in your normal monthly or quarterly conversations with your consultant, he or she starts to push you to make investments that you are not sure about, please consider this as a red flag. May encourage you to invest in a product that is better for the consultant than for you.
6. He hates being checked
Having an active account with a financial advisor is not the same as having a checking or savings account. Your account with your financial advisor is more like a vivid reflection of your financial situation.
Although you may not check your 401(k) regularly, and you don’t know the exact amount in a standard savings account, you need to know the status of the assets your financial advisor manages.
The people blackmailed by financial advisers are those who don’t pay attention. When you hire a consultant so that you don’t have to worry about the growth potential of your assets every day, you really need to worry about whether your assets are often handled properly.
Consultants do their work correctly and won’t mind you checking them out. After all, they know the reputation of their profession as much as you do.
Kent McDill is a senior journalist who has been focusing on personal finance topics since 2013. He is a writer for The Penny Hoarder.
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