You know – the majority of financial advisors are decent people – but let’s face it – they are selling a product and they try to pigeon hole every investor into basically the same product class. Why – because that’s what they can control. That’s not great news when it comes to dealing with your money. A wariness of the stock market and financial advising are the primary reasons we got into alternative investing in the first place.
Also check out: 5 Reasons to Drop Everything & Learn About Alternative Investing!
Don’t get us wrong, there are still good financial advisors out there, so we recommend you take what you’re about to read with a grain of salt:
1. Heavy commissions.
It’s common to be charged a service fee by most financial advisors, but what about commissions on your money? Most firms charge commissions and bonuses based on sales coming from your money. The downside to this equation is financial advisors may put their interests before your own, in order to cash in on a bigger check. Yes you will hear the term fiduciary advisor – they may have your best interests at heart – but yet – the fees and commissions are still there and the results can be devastating over the years! For a closer look at how these fees can destroy your retirement future – watch this video from a PBS documentary with John Bogle, founder of one of the largest mutual fund companies in the country.
2. We will find a way to make you fit our product
An advisor should be intimately informed of your financial situation, cash flows, goals, expectations, lifestyle and so on. Most advisors have dozens of clients and as such, their level of familiarity and personalized service tapers dramatically. It’s their job to know you, in order to achieve your financial goals — don’t settle for anything less. You should not fit a product – an investment should fit your goals.
3. I have more sales training than investing training
Nowadays, many financial advisors are really no more than salesmen. You get to know them, tell them about your financial situation, share your goals and expectations, and start to feel comfortable putting your most valuable assets in their hands. They have many clients but few tools in their tool belt – consequently – everyone is pretty much lumped into the same 3 or 4 “baskets” to invest in – does that make sense? No – but it is what they can control and move quickly onto the next client.
4. There have been more than 10 major setbacks in the last 50 years
Yes – your financial planner can show you a pretty graph with returns over a cherry picked number of years – the graph will look amazing! But can you really afford to take the chance that just a few years prior to needing those funds that a “correction” will come (have to love that term – correction – seems so sanitary)
5. Alternative Investments are superior.
Most “traditional” financial advisors don’t take into account the world of alternative investments – why? Because they cannot control alternative investments – they even label them “alternative” which makes them sound so sinister! They play in the stock market; Wall Street is their domain and they can control an outcome that insures their success. Money invested in the stock market is nothing more than going to the casino and we all know – only the house wins in the long term in the casinos.
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