Plenty of individuals consider themselves to be financial experts. Some might work for banks as financial advisors and may even have advanced degrees that qualify them to hold those positions. You might also have a friend or relative who claims to be good with money (even if their financial track record doesn’t reflect it).
If you’ve retained a financial advisor for monetary advice or plan to seek one out, they may help you a great deal, but you should also remember that they’re not infallible. You might choose to follow many of their suggestions, but there are other times when it might make sense to discount what they say.
Let’s look at some of those instances, so you can know to watch out for these situations if they ever occur.
They Recommend Tools that Won’t Help You
The best financial advisor is one who takes your unique situation into account. They should not use a one-size-fits-all approach concerning your money.
However, situations sometimes arise when an advisor will steer you in a direction that’s not necessarily the best fit for you. For instance, they might suggest you look into adebt avalanchecalculator, a budgeting app, or a debt consolidation loan.
Any of those might work for some of the financial advisor’s clients, but not all of them. The advisor might have an affinity for one of those methods, but it may not be the best move where your finances are concerned.
Because of this, it’s best to read up on any financial tool the advisor recommends. Based on your research, if you believe the tool or technique they brought up can help you, use it. If you feel uncertain about it, you can always discard their advice or seek a second opinion.
They Ignore Your Stated Goals
Most people contact and hire financial advisors with specific goals in mind. For instance, you might want to retire by a certain age, or you may wish to structure your resources to help your kids pay for college.
A diligent financial advisor should start their relationship with you by asking about your goals. Then, they should offer you the best advice on how to attain them.
Sometimes, though, you’ll have an advisor who ignores what’s most critical for you from a financial standpoint. They may feel like they have a system that gets you the best return on your investments. If you use that structure, though, it may not be the best way to allocate your finances to reach your stated aims.
If you feel like the advice a financial expert gives you is not going to put you in the optimal position to reach your goals, remind them of how you want your money to work for you. If they still don’t seem to be listening to you, you may have to terminate that relationship.
They Say You Don’t Need a Third-Party Custodian
Your advisor might recommend that you put some money into a commodity pool or mutual fund. In finance, a third-party custodian is an individual assigned to such a venture who essentially acts as an intermediary between a fund manager or investment advisor and a client.
Your advisor might tell you that you don’t need to have one of those. If that ever happens, you may be dealing with someone who intends to perpetrate fraud.
It’s the third-party custodian who sends you statements about what’s happening with your money independent of the financial advisor. If you don’t have one of those in place, you’re placing all your trust in this financial expert. In other words, there’s no system of checks and balances to make sure they’re not doing something with your money different than what they claim.
The longer you’re in a relationship with a financial expert, the more you’re likely to trust them. In the early going, though, exercise caution until you’re sure this is the right person to help advise you.