I'll preface this list by saying that most financial advisors are ethical and knowledgable professionals. But as with every profession, there are always exceptions. There are specific red flags in this industry that could be indications of a larger problem, such as unethical behavior. While most of these on their own may not be immediate deal-breakers, encountering one of these flags should set off warning bells. Red flags can present themselves at any time: during the first interview, in the beginning of your relationship or even years into the partnership with your advisor. If you come face to face with one of the below situations take notice, evaluate the relationship as a whole and most important, trust your gut. If something feels wrong, it probably is.
They talk more than they listen. This is especially true in the first interview. They need to tell you about their practice, but the primarily focus should be on you. Not asking about your goals, needs, risk tolerance, history, family and fears means they are not trying to get to know you, and what is best for YOU.
They promise they will beat the market. If they can beat the market, why are they still working? They should be focusing on growing their own wealth (and living on their private island!). As the Efficient Market Hypothesis describes, the market is extremely proficient at pricing securities. Thousands of analysts study the market so when new information appears, the market reacts quickly by increasing or decreasing prices. While it does happen, it's rare to consistently outperform the market (there's only one Warren Buffett).
More at: https://www.forbes.com/sites/lizfrazierpeck/2017/05/15/11-financial-advisor-red-flags-that-you-should-never-ignore/#dc5e9e06cb1b
They talk more than they listen. This is especially true in the first interview. They need to tell you about their practice, but the primarily focus should be on you. Not asking about your goals, needs, risk tolerance, history, family and fears means they are not trying to get to know you, and what is best for YOU.
They promise they will beat the market. If they can beat the market, why are they still working? They should be focusing on growing their own wealth (and living on their private island!). As the Efficient Market Hypothesis describes, the market is extremely proficient at pricing securities. Thousands of analysts study the market so when new information appears, the market reacts quickly by increasing or decreasing prices. While it does happen, it's rare to consistently outperform the market (there's only one Warren Buffett).
More at: https://www.forbes.com/sites/lizfrazierpeck/2017/05/15/11-financial-advisor-red-flags-that-you-should-never-ignore/#dc5e9e06cb1b
0 comments:
Post a Comment