Put simply, in a fiduciary relationship an advisor will do what is best for you (the client), not what is best for herself (the agent).
In The Wealthy Barber, David Chilton warns, "Most insurance agents sell cash-value policies; mutual fun salespeople sell funds and tax shelters; brokers sell stocks and bonds; bankers sell guaranteed investment certificates ... Product sales are where the money is, so very few of them are true financial planners."
You always want to be sure that whoever is giving you financial advice is giving you advice for your benefit.
Who not to ask for financial advice:
1. The person at work or the relative who is always bragging about their great investments. Why? Likely this person is in horrible financial condition or their investments are extremely high risk.
2. A person who approaches you. When someone comes with an investment opportunity it is more than likely for their own benefit more than your own.
3. A person who receives commissions for only one type of financial product sale. For example, if a person only gets commission for selling mutual funds in the XYZ mutual family they likely will not recommend something from the ABC mutual fund family, even if there is an option better for you.
4. A person who you just have a bad vibe about. Emotions do play a huge role in investing. At times that is good, and at times it is extremely dangerous. This is a great time to follow your gut. If it does not feel right, it's not.
5. A person who spends more time trying to sell you on the product than they do trying to teach you about the product. Such a person uses phrases like, "trust me", "believe me", "I can assure you this is best."
6. A person who makes unrealistic promises. The only way to increase gains is to increase risk. If a person is promoting a risk-free investment with good returns, walk away.
Who should you ask for financial advice:
1. A person in your church. If someone seems to have it 'together' financially, ask them if they might recommend someone who could give you some financial advice. When I first moved to a new city I asked the preacher who he would recommend. I figured he had nothing to gain by making a dishonest recommendation.
2. A person who will willingly explain the situation to you. When you ask 'how', 'why', 'when', and 'what' questions they reply with a smile, 'that's a great question' and then go on to explain it in a way you understand.
3. A person who says this is not the product for you or the time for you. If you meet with a financial planner who says 'I don't think this is the best time for you to consider ...' When the time is right go straight back to that person.
4. A person of integrity. There are a lot of knowledgeable financial people out there, but there is more to financial advising than knowledge.
Craig is a Christian, missionary, family man, traveler and blogger. He writes and offers daily updates on his blog on personal finance from a Biblical perspective at http://www.moneyhelpforchristians.com. A selection of his articles are available on EzineArticles. However, to receive all his posts simply go the the blog address above and subscribe for daily updates.
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