I recently read an article where the person was writing about how to choose a financial planner/advisor…some of what he said made absolute sense. Such as, asking for references from existing clients and checking that they are in fact registered with the Financial Services Board. But then, I am afraid, he lost all credibility when he suggested that you should “ask the advisoused-car-salesmanr for a free review of your position and some ideas on where you are weak, nothing too specific, he or she does not have to give it all away, but have you ever paid for a test drive, in a car?”

Well so much for professing to be a financial planner – he just compared himself to a car salesman! Surely there are better comparisons for someone claiming to be a professional?

I have a friend who has an excellent (in my opinion) definition of the word “free”. He says that free means “positioned to secure good faith to sell you something at a later stage.” Financial planning is not about selling things to people – it should never be for “free”. There are too many big financial services companies and individuals with hidden agendas that are trying to disguise product selling as financial planning.

There is very seldom anything for “free” – yes, there are times when we might waive the initial consultation fee but rather than comparing himself to a car salesman, would it not be more appropriate to compare himself to a doctor? You make an appointment (with a well qualified person) and you leave with a diagnosis (you might want a 2nd opinion for which you will pay), a prescription and an invoice. You are then free to purchase the medication anywhere you choose. There was nothing for” free” and there was no feeling of “it was for free but I think I’ve just been had!”

In its raw form, financial planning might never ever even involve products. It is about identifying financial risks – not about disguising the sales process.

So yes, bfinancial_advisore careful how you choose a financial planner – find out if he/she really is a financial planner or a disguised product salesman. And while there is nothing wrong with selling products and there are in fact some really good salespeople, it is not financial planning! So dont be fooled – there is seldom anything for free!

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2 Responses to “It’s for free (yeah right!)”

  1. Michael says:
    October 21, 2009 at 1:06 pm

    I would like to mention, that one can not solely place your financial future on your financial advisor, I feel very strong that people /clients must take responsibly too, it is easy to to give the advisor the blame when things don’t do as well as you have hoped.

    How can people take more responsibly, they can read up how product are structured, research on different products and their benefits, it can very easily be done via the internet these days. Another great way is to review your policies/investments/wills at lease once a year and if they are not inline with your plans adjust accordingly.

    My wife and I review our matters every year in Oct/Nov and we have discovered a retirement product we have is worth much less than we thought. We now have a change to correct it before it is to late.

    By doing a little bit of research you can make a list of questions for you advisor to answer for you when you have your yearly review.

    Just some thoughts from my side

    Michael

  2. Gregg says:
    October 22, 2009 at 2:51 pm

    Hi Michael
    I agree with you – people do need to take more responsibility and financial planning is a bit like fixing the tap at home – anyone could do it. You buy the manual, buy the tools and spend the time doing it and it might take a while and cost a bit, or you call the plumber, knowing that your time is more valuable and it is also not really an area of interest/expertise.
    It is also a good idea to review things on a regular basis or if/when things change (death, divorce, birth…)
    On your side – dont be too hasty in making changes to your RA – especially if it is a life insurance based one – the penalties are huge. You could also look at changing the portfolio of the RA – maybe it is too conservatively invested…if this is not the issue then rather start a unit trust based RA – you can get into a UT RA at no initial fees and there is no contract either.
    Go well
    Gregg

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