The 5 Worst Mistakes by Financial Advisers

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Financial advisers are skilled allies, even for experienced investors, but unfortunately many oftentimes fall prey to preventable errors and lapses in judgment. These can include moral issues, errors in business strategy and even problems with personal approach. Here are 5 common errors made by financial advisers and what you can do to avoid them.

1) Making uninformed choices

This is tragically more common than it should be. A qualified and professional financial adviser should always double check appropriate rates and gather all the information about the product(s) offered. Be sure to ask your adviser lots of questions. If they can't answer something knowledgeably to your satisfaction, refuse to proceed until they can.

2) Fraud

In any profession where money is involved there are bound to be cases of fraud. While there are no telltale signs of a crook, an adviser that seems more concerned with making the sale than doing what is best for you is certainly a red flag. If you notice this type of behavior you should seek out a new adviser or you might just wind up buying a fraudulent investment.

3) Collecting a cheque in the adviser's name

Cheques should never be made out to the adviser because all your money is handled by the corporation, typically a brokerage firm, where the adviser works. This should never, ever, be intermingled with the adviser's personal accounts.

4) Putting unneeded pressure on the client

A good adviser won't resort to coercive tactics. A quality financial adviser should always look out for the client's best interests first which means not forcing them into a plan or investment they are uncomfortable with. Remember, you are in control, remind your adviser of that and keep it that way.

5) Failing to disclose probable issues with an investment

Your adviser is obligated to disclose all aspects of any financial product, regardless of whether or not you chooses to buy it. Ask lots of questions, and keep questioning, until you are sure you have been told everything about any investment you are offered. Also be sure that you understand your adviser's recommendation completely -- remember, just because your adviser recommended it doesn't mean it is the choice for you.

 

 

 

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