It seems like everyone around us has become an expert in investing recently. Whenever the subject of what to do with your money is raised, we all feel the need to contribute our (metaphorical) two cents to the issue. “Go for Bitcoin,” one says, while the other declares that “now is the best time to put a stash on gold”. “Taiwanese indices are the best,” argues one, while another claims that “real estate is where your money should be, the sooner the better.”
There’s a reason why only some people are certified by law to be financial advisors. Nevertheless, it is still hard to spot the professional ones from the fraudsters, especially when a lot of money is at stake. How can you tell, hence, that you are given good financial guidance by the person you trust with your money? We’ve gathered a few tips that can help you find your way around.
Holding a clean record
The first and most important trait that you should look for in a financial advisor is honesty and decency. A lot of the people out there are crooks, pretending to be professionals. For that reason, you should never shy away from checking out the person’s history. Do a bit of research on Google, ask for recommendations, etc. Better safe than sorry is the rule here.
Lately we’ve been hearing of a common CFD trading scam, where phony financial advisors try to persuade people to put their money on all sorts of contract for difference (CFD) deals. This basically means buying and selling some sort of asset without owning it, or, in other words, betting on its value. The big problem here is that there’s nobody supervising the terms in which these deals are being made, and subsequently nobody to talk to when the fraudster takes off with your money. Do yourself a favor and stay away from people who do not prove to be trustworthy.
Institutionalized and licensed
Just like other professions, a financial advisor must naturally have the proper education, experience and skills to do what they do. Respectable institutions would never hire an advisor without proper credentials. That’s why getting institutional financial advice is safer. Don’t feel ashamed to ask your advisor where they had received their education, it’s a legitimate question.
On the other side of this equation, stay away from sweet-talkers and so-called self-made millionaires. These people will try to blow away any talk aboutthe importance of proper education with the help of their charisma. Don’t fall for that. You don’t really know how they made these supposed millions, and it’s probably not in the most honest and decent manner.
Consistent but not insistent
Your financial advisor is supposed to do just that – advise you. That’s what you pay them for. They are supposed to give you solid advice, with a rationale behind it that you can clearly understand. If things start seeming vague, you need to demand an explanation and if one can’t be provided, well, then it’s time to say goodbye.
Furthermore, they are supposed to advise you but not persuade or pressure you into doing something. You have the final word here. If an advisor seems to be putting too much stress on you to perform some sort of action, they probably have a hidden motive. Maybe they are at a conflict of interest, maybe they get some sort of a commission for each investor they manage to lure to some sort of venue. The reason is not important. What’s important is that you notice when you are being pushed around, and that you cut all ties instantly.
Bottom line – your best compass is your gut feeling
Having said all of that, nothing replaces your instinct when choosing a financial advisor. It’s not all about licensing and credibility, there’s more to it. Dynamics and personality are also very important. So, keep in mind all that we have mentioned above, but trust what your stomach is telling you the most. If it’s a bad deal, you’ll feel it, even if the advisor boasts 30 different diplomas.
Other than that, it’s not a bad idea to listen to the people around you, especially close friends and family, who you know have your success at heart. Your father, for example, may not know a lot about bonds and breaking points, but he probably wants you to make the most of your money and his intentions cannot be doubted. At the end of the day, it’s all about mixing different advice you consider worthy, and giving it a go.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.