Sneaky Suspicions About Your Advisor?
Today’s investors are more savvy and sophisticated than ever. Unfortunately, as your expertise and expectation levels have increased, the traditional advisor/client relationship has changed very little. Many of you haven’t felt comfortable with your advisor relationship for some time. If you’ve got a sneaky suspicion that your advisor isn’t delivering all he or she should be, then this article is for you. “Guarding Your Wealth” is a nationally syndicated weekly personal finance column written by Jeffrey D. Voudrie, CFP. Please visit our website, www.guardingyourwealth.com to read past articles in our archive.
(PRWEB) February 21, 2005 -- Today’s investors are more savvy and
sophisticated than ever. Unfortunately, as your expertise and expectation levels
have increased, the traditional advisor/client relationship has changed very
little. Many of you haven’t felt comfortable with your advisor relationship for
some time. If you’ve got a sneaky suspicion that your advisor isn’t delivering
all he or she should be, then this article is for you.
Foremost among the
complaints I hear from investors is that they’re tired of being sold. You can
smell a sales pitch a mile away. You know when you sit down with an advisor that
you’re getting a well-practiced spiel given countless times before. You know
this advisor is getting paid on commission, but how much is this influencing
their recommendations?
When you are being pitched an insurance product
like an equity-indexed annuity or a variable annuity, remember most advisors are
paid on commission, they have to sell a large number of investments every month
or they no longer have a job. And if they have the choice of offering a mutual
fund with a 2% commission or an equity-indexed annuity with 10% commission,
which will they recommend?
This brings us to a second investor complaint.
Besides knowing they’re just being sold, investors are also beginning to realize
they’re all being sold the same thing! Each advisor promises to meet your unique
needs, but you have this uneasy feeling that this advisor has cookie-cutter
solutions for all his or her clients. You feel like a square peg being forced
into a round hole.
Once again, your suspicions are true. The traditional
advisor/client relationship is built on trying to deliver pre-packaged products
designed to appeal to the masses. You soon recognize that regardless of what the
advisor says and in spite of your unique needs, you are being sold the same
‘solution’ as everyone else.
Many investors confuse the attention they
receive during the selling process with the attention they’ll receive afterward.
In most cases, the two are entirely different. Before the sale, you’re treated
as special. After the sale, you’re just another face in the crowd. You soon
realize that the advisor isn’t monitoring or managing your money the way you
expected. All that warm fuzzy attention has been replaced with indifference.
What happened?
Once you pass the ‘courtship’ phase of the advisor
relationship and you become a client, your advisor moves on to repeat the
procedure with the next prospect. Starting with a monthly paycheck of zero tends
to do that with people. Besides, they aren’t getting paid to service your
account. They’re getting paid to sell you. Once you’re ‘tapped-out’, it’s time
to find another ‘cherry’.
If you’ve been a serious investor over the last
decade, you probably discovered something else about your commission-based
advisor. When times got tough, as they did back in 2000, you expected your
advisor to manage your money and take steps to prevent losses. Remember their
sage advice? “Just hang in there. The market will come back.” And they sat on
their hands and did nothing while your nest egg dropped 10%, 20%, or 30% in
value. What kind of advice is that? Many of you still haven’t recovered those
losses several years later. You probably would have done better on your
own!
You’ve also discovered that most commission-based advisors aren’t
the financial experts they market themselves to be. Most of the training they
receive revolves around how to be better salespeople, not how to manage their
clients’ money. They cling to the buy and hold strategy because it doesn’t
require much effort on their part.
So what should you do? First, find an
advisor whose financial incentives are aligned with your success. You should
only have to pay them for them period they manage your money. Remember that you
aren’t going to know if an advisor is the right one for you until after you’ve
worked with them for several months, so don’t pay up-front commissions or allow
yourself to be locked-in by surrender penalties. Do your homework. Make sure
your advisor is acting in your best interest, not just their own.
Want my
take on your situation? For free, clear, unbiased advice call or send your
questions to e-mail protected from spam bots. I will respond to them personally.
Also, see answers to questions other readers have asked on the Q&A page at
www.guardingyourwealth.com.
Mr. Voudrie is a Certified
Financial Planner, nationally syndicated newspaper columnist and President of
Legacy Planning Group, Inc., a private wealth management firm that employs
sophisticated proprietary strategies designed to protect and grow its clients'
investments. He can be reached toll-free at 1-877-827-1463 or at e-mail
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Looking for an energetic expert who is
passionate about financial and wealth management? Mr. Voudrie is an excellent
speaker who will excite and inspire your audience. Mr. Voudrie is available for
a limited number of speaking engagements, television appearances and radio talk
shows. For booking information, contact Christine Lavender at (877) 827-1463 or
email e-mail protected from spam bots.
Related Articles can be found at
www.guardingyourwealth.com under the Guarding Your Wealth
Article Archive:
The Secrets to Choosing An Advisor
The Secrets to
Choosing An Advisor, Part II
The Secrets to Choosing An Advisor, Part
III
Performance Really Does Matter
Equity-Indexed Annuities, Agents Prey
On Unsuspecting
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Source : http://www.prweb.com/releases/2005/2/prweb210500.htm