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5 Signs that your Financial Adviser may not be THE ONE

Posted 4 August, 2016 by Clearly
in Pitfalls to Avoid

Your financial adviser may dress really well and may speak really eloquently. Your friend who referred you to him thinks he is a great guy.

And he may be. But does that make him the best financial adviser for you?

 

Not so easy to spot the chosen one

 

Although you don’t suspect fraud and your financial adviser’s work is at least respectable, you can’t help but have vague feelings that someone else could better help you.

All of our understanding is that a financial adviser is supposed to be someone who has your money and your best interests at heart. Sadly, in this industry, genuine advisers are rare and hard to find. There are some unscrupulous people who want to take advantage of you and simply take your money, instead of growing it for you.

While it is tough to tell what your adviser’s real intentions are, there are still warning signs which you can watch out for.

 

1. He does far more talking, and far less listening than you like

 

OMG-Insurance-is-so-important-for-you-do-not-miss-out-on-a-chance-to-buy-it-now-or-it-will-be-too-late-by-the-way-I-have-a-great-proposal-for-you-just-tell-me-your-name-thanks

OMG-Insurance-is-so-important-for-you-do-not-miss-out-on-a-chance-to-buy-it-now-or-it-will-be-too-late-by-the-way-I-have-a-great-proposal-for-you-just-tell-me-your-name-thanks

 

Your financial adviser may not listen to your real concerns, whether individually or in a couple. The wrong adviser talks to hear himself and loves to hear himself talk. However, the right adviser constantly checks and make sure the information being shared is understood.

 

In a way, we can liken the financial advisory process to a visit to the doctor. You need to first describe the symptoms you are facing, and the doctor then probes further to better understand the problem.

This makes perfect sense, right?

 

2. He prefers to (product) push, rather than ask the right questions

 

Nice to meet you! Now sign here

Nice to meet you! Now sign here

 

It is normal for financial advisers to showcase products by the company they are representing. However, if that’s is all they talk about, then you should be careful. If the adviser is asking more from you than you can afford, then they may be doing you more harm than good.

A good financial adviser should ask you questions instead of pushing products at you. Such advisers would ask what your risk tolerances are, your goals, your income, your expenses. All this information would help them to tailor their advice and financial strategy to your best interests.

 

Insurance products are merely tools and instruments to achieve an end – be it financial security or financial independence. We buy them to fulfil a need, to achieve an objective, not because the person selling them gives a great pitch or provides us with a discount or offer.

To further the visit-to-the-doctor analogy, have you ever seen a doctor say “A batch of statins just came in, they are the latest and best in the industry, with a cholesterol reduction rate of over 78%. Let me give you a 2 for 1 promotional offer, how about it?”

 

3. Not willing to put anything down on paper

 

Oh, my fancy Mont Blanc is just for your signature, nothing more

Oh, my fancy Mont Blanc is just for your signature, nothing more

 

Advisors promise to act in utmost good faith and exercise professional competence. This is not just a verbal promise but should be displayed and written down. A proper procedure should involve disclosure of any sorts of conflicts of interest and disclose how they are paid. If the adviser refuses to give you this, you should be wary of this person.

 

Misrepresentations are rife and are the bane of this industry, so if your adviser makes claims like “Our company can exceed this 4.25% rate of return, no problem” – make him write it down on a piece of paper. And make him sign it.

 

Then watch him squirm.

 

4. Lacks any proper financial strategy or research to support his recommendations

 

When its absolutely imperative to find that aircraft

When its absolutely imperative to find that aircraft

 

This is the litmus test of a true adviser.

All advisers should be able to explain to you what is his strategy when he plans for his clients. They should be able to show you pictorially how he would construct your financial portfolio. They should have a written plan for rebalancing your portfolio in troubled times.

To further enhanced his recommendations, the strategy should be backed with academic research.

 

Beware of the ones that insist that you need X of this and Y of that, just because that is what “I tell all my valued clients”.

While no one can predict what happens in the future, a good adviser should be able to give you clarity and direction. If they are merely making up numbers or telling you that their strategy is a “secret,” then you should find another adviser.

 

5. Not revealing his Representative Number

 

A background check on me? Let me get back to you on that

A background check on me? Let me get back to you on that

 

On 26 November 2010, MAS (Monetary Authority of Singapore) launched the RNF(Representative Notification Framework) which allows financial institutions (ie. Banks, insurance companies & Financial advisory firms) to lodge notifications with MAS for their advisers who intend to conduct regulated activities Securities and Futures Act and the Financial Advisers Act.

It is therefore the Financial Institutions’ responsibility to certify that the hired agent is fit and proper and meet the competency financial soundness and integrity standards required.

 

Once the appointed adviser is licensed to practice financial advisory, his name would be published on the Register of Representatives on MAS Website. Each agent is assigned a unique representative number which will stay with them forever.

Ask for your adviser’s RNF code and with this code you are able to find out about your adviser’s competency to recommend and advise you. At the same time, you will be able to see any past regulatory actions taken against the adviser.  If your adviser has a regulatory infringement record, it is better that you work with someone else with a clean record.

Site: https://masnet.mas.gov.sg/drr/rr.do

 

Rounding it Up

 

It isn’t all that hard to protect yourself and your interests from errant advisers. All it takes is a bit of caution, a dash of diligence, and some prior knowledge.

Go out there today and find yourself a great adviser!

 

This article was contributed by Zest Chia, and he represents an independent Financial Advisory firm. He wrote this article in the hope of educating more people and assisting them in their finances. You can reach out to him at 9675 9587.

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

 

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