Myth #4 My Broker Has My Best Interest at Heart
Financial Myth’s Blog Series
Unfortunately, much of the information relating to money that permeates our thinking as individuals and as a society is based on myths. This misleading information has no factual basis and can actually prevent us from achieving our financial objectives. This week we’re dealing with the misconception that your broker has your best interest at heart.
Follow along with us through the Financial Myths Blog Series. You may be surprised by what you discover about yourself and your financial plan!
Myth #4 – My Broker Has My Best Interest at Heart
There are a million financial advisors/brokers in the United States. Many are sincerely caring people that desire to do good. Even so, I see many flaws in their practice that they might not even be aware of. I’ve listed a few questions to help you analyze their suitability as your financial coach.
1. Are they independent?
2. Are they planning-oriented?
3. Are they educated with a comprehensive knowledge of the industry?
4. How are they paid?
5. Do you fit their sweet spot or niche?
6. Do they deliver what you want?
7. How many clients do they have?
So, let’s dive right in and discuss these points.
Are they independent?
When I started this business, mother Mutual told me I was independent. However, all I knew was what she told me. Everyone around me said we were the best, and the company was the best! Back then, I could not see out of my box. The day I truly became independent, the world opened up before me! I was awed by the variety of options and choices that better served my clients.
Are they planning-oriented?
Even with the best intentions, it is hard to place products advantageously when there isn’t a plan driving the process. With a comprehensive plan, product/investment placement becomes simple – it fits!
Have they educated themselves?
I’ve worked hard to get advanced designations and degrees in financial planning. This extra knowledge helps me think outside the box! No matter the conversation, I have better thought processes that lead to better ideas.
How are they paid? There are three ways financial advisors get paid in this industry:
1. Commissions
2. Asset-based Fees
3. Planning Fees
I am not convinced that one way is better than the other. Nevertheless, if you ask someone how they get paid and they flinch or hesitate – take note of it. Likely, they don’t believe in themselves. We need to have enough confidence in how we get paid and, more importantly, what we deliver to earn that payment.
Do you fit their sweet spot?
I used to have 2,300 clients and did a poor job for everyone. I did not have the time, staff, or energy to do it well. It is easy for people to take you on as a client and get paid, but if you don’t fit their sweet spot, you will get ignored. They get paid, but you don’t get serviced! Ask who their ideal client is. Are you a good fit?
Do they deliver what you want?
There are people that claim to be financial planners, yet sell only one mutual fund company. The person you’re dealing with should have lots of flexibility in the products, ideas, and solutions they offer. If they only sell one fund, how can they have enough flexibility to make sure you’re getting what you need?
Do they have too many clients?
They may be so busy that they can’t do what they wish to do for you. I believe it’s better to hire a planner with less experience and time to focus on you than someone overworked and short on time.
Consideration, flexibility, knowledge, experience, independence, and planning should be the foundation of your financial path.
Do not engage with someone in this business without seriously considering and questioning that person about these seven points!
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