Every year millions of investors have high expectations when they select their latest and greatest financial advisers. Where do the expectations come from? Research shows financial planners, financial advisers, sales representatives, and money managers create excessive expectations when they use sales tactics to convince investors they are:
Competent investment experts
Ethical professionals who put investor interests first
Capable of producing exceptional investment returns
Excellent communicators who keep investors fully informed
Why do advisers create high expectations? They increase their odds of winning when they create high expectations. They reduce their odds of winning if they do not create high expectations. Win, they make a lot of money Lose, they make nothing
Paladin research shows investors should establish relationships with financial advisers that are based on four “realistic” expectations.
Investors have the right to expect competent advice from advisers that will help them achieve their financial goals. For example, they need a specific amount of money for a financially secure retirement. Advisers should provide specialized knowledge and services that help them realize their hopes and dreams
Investors should expect advice that is free of conflicts of interest and puts their financial interests first. When advisers have to choose between doing what is best for investors and what makes them the most money, they should choose to do what is best for investors.
How do investors know their advisers are providing ethical advice? Most of the time, they do not know. Investors’ best protection is doing their homework when they select advisers and limit their selections to advisers who have clean compliance records, are Registered Investment Advisers and are compensated with fees like other professionals, and are acknowledged fiduciaries. Most investors use the services of experienced professionals to conduct background checks for them to validate the accuracy of adviser claims and data.
Investors should also expect meetings with advisers on a regularly scheduled basis and the professionals should be readily available when investors want to talk to them. Too many investors experience adviser disappearing acts during down markets. Advisers should meet with investors on a quarterly basis to review investment returns and meet annually to update their financial plans.
We make a real effort in our financial planning business to act in our client's best interests make sure you keep us in mind