Cash Flow-Who Can You Trust?

That darn Flexo over at Consumerism Commentary just likes to stir the pot. Yesterday he beat up on poor Robert Kiyosaki and today he’s got financial advisors in his sites! He actually brings up a serious question about receiving unbiased advice from financial advisors. Having been a financial advisor for 15 years let me give you some thoughts.

Advisors make mistakes-I know because despite my best efforts and intentions some clients lost money. It drove me crazy. For the most part I was on straight commission and my thought was this: I’d better give excellent results to my clients so they will give me great referrals-because I hated cold calling! I think all of Flexo’s points are valid and need to be answered to your satisfaction:

*Are you legally obligated to act in my best interests at all times? If so, are you willing to put that in writing?
*Will you disclose all potential conflicts of interest?
*In what ways are you compensated?

I still think one of the best questions that you can ask any financial advisor is this: What is your financial exit strategy? Is it income and dividends from a stock portfolio, real estate, trading options or laddering CD’s? This will tell you a lot about how the two of you may click. I don’t think it is important to be dealing with an advisor who is already a millionaire-I would be more interested in where they are now and how they plan to get to financial freedom. When our portfolio exceeded $1.2 million dollars I don’t think that I gave any less service to my clients because I was not going to “retire” and I was very passionate about helping others achieve their success. I still was very money motivated but I also wanted great results for my clients so they would refer other clients to me. The main difference was this: I wouldn’t take a $300,000 account-I wanted larger accounts because they were more of a challenge to me and frankly I didn’t have the patience for a $25,000 account. But at least I was honest about it and suggested to some clients that we would not be a good fit! So, who can you trust when it comes to personal finance? Get referrals and check with the SEC and NASD if you have any questions. But most importantly, trust your gut and educate yourself enough to ask good questions!!

Steve Mertz
Proceed with Caution!

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