You need to say “Yes sir” and “Yes ma’am” and you don’t ask inappropriate questions. These are great rules for most places, but the one place you don’t want to be polite is in your financial advisor’s office. In fact, your politeness could wreck your future.
Recently, I had a client come in. He had been working with another advisor for five years. He knew his advisor personally before they started working together and trusted him. But his advisor had asked him to move his money to a bunch of new products and my client could not figure out why, so he wanted a second opinion.
Currently, he had two financial products: an annuity and life insurance.
Now, his advisor was telling him to pay an expensive termination fee to leave these tools and sign up for another one.
It didn’t make sense and he was too afraid to be rude and ask his advisor himself so he came to me.
Don’t Be a Victim; Don’t Be Polite
Most people would say they would NEVER make the mistake this client did, but it happens all the time.
Financial advisors are good at their jobs and will do their best to convince you the products you’re using on the best for you.
And you’re paying them to know what is best for you, right?
Here's what I advice you do to avoid falling into this trap:
- Be Upfront: Ask your advisor how much money their make if you buy the product he’s recommending for you. More to the point, do you know how much your advisor is getting from any other products?
- Ask Questions: It’s okay to challenge your advisor and ask questions. After all, it is your money on the line. Ask what some similar products would be and what he may get paid if you buy those products instead. Ask why you should choose the products he’s recommending.
- Get A Second Opinion: When all else fails, do what my client did, and get a second opinion. Bring the products you’re considering to another advisor. Ask him the same impolite questions you asked your advisor. Then you’ll have a more well-rounded view of our choices and be able to make the decision that’s truly best for you.
These recommendations will make most people uncomfortable. We want to be polite, we want people to like us. But is politeness really worth the money you’ll pour into this product because you were too afraid of an awkward situation?
The World Isn’t Black & White; Your Finances Shouldn’t Be Either
I’m not a very black and white financial planner. I don’t believe that one product ALWAYS works for people. I don’t believe that other products will NEVER work either. Almost any financial product can benefit somebody, but it could also hurt others.
Some planners try to assign the same products to every client and dissuade them from using other products, but that just doesn’t work.
Financial products are tools, like your hammer. There are some projects that need a hammer, like hanging a picture. But if you’re trying to paint a wall, using a hammer makes absolutely no sense.
For the I mentioned at the start of this post, the products he was using didn’t help him or his situation but were costing him a lot of money.
His annuity was built to generate more income for him. It was expensive for him to buy into but it did have a large payout as well. The problem is, he had a great job and great assets outside of this annuity. He didn’t have an income need and shouldn’t have been paying so much to use this product as it didn’t actually benefit him.
Additionally, his life insurance policy had a large death benefit, but he wasn’t married and he didn’t have any kids. While a life insurance policy is a good idea, his was expensive and he didn’t have anyone to pass his death benefit to when he died. So what is the point of having it?
If you’re like me, you’re thinking: “What in the world???”
Why would this client’s advisor and many other financial advisors, use black and white techniques for their customers, recommending the same products for everyone regardless of their situation?
It’s not really as mysterious as you think... I'll pull back the curtain.
Just Follow The Money To Find The Truth
Most of the financial world works on commissions.
In fact, a lot of sales jobs do.
Many of you, if you work in retail, probably get a commission each time you make a sale. You may even get extra money if you sell certain products.
It’s the same for financial advisors.
In the case of my client, his advisor was getting a hefty commission for the products he sold to my client AND they were part of a bundle deal so he actually got even more money for having him signed up for both of these products.
Instead of worrying about what products made the most sense for his customers, he was pushing the products that would make him money.
And just because he made good money off selling these products, doesn’t mean that weren’t good products. They were from Grade A companies and had great payouts. They probably had made many of his customers lots of money, but that doesn’t mean it made sense for my client’s situation.
Instead of worrying about being polite to his advisor, my client should have been upfront and asked the important questions.
Is Your Financial Planner Is Invested In YOU?
Instead of wasting money in the name of politeness, ask the tough questions and make sure you have a financial advisor that is truly looking out for you and your money. You can sign up for a free consultation with me at any time to get a second opinion about products you’re currently using.
My business practices are an open book for you and I’ll be upfront and honest about where I get my money from. No politeness allowed!
It may be a little bit awkward, but you’ll come out with confidence that you are making the right decisions and have the best tools for your situation.