Traits of a Bogus Financial Advisor



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Traits of a Bogus Financial Advisor

03.10.2007 23:33 Wednesday

It has become a common occurrence for people, especially those in the middle and upper class brackets to solicit the services of financial advisors. Financial advisors, like any other professionals fall into two main categories: the true expert and the bogus. The begging question is: how does one tell the two apart? I personally think there is a fine line between the two categories and one will have to keep his eyes open, ears attuned and wits alert, in order to realize the difference.

Essentially, a financial advisor is supposed to ask his/her prospect necessary and sufficient questions to unveil his/her personal circumstances and ‘actual’ financial needs and objectives. It is important that the level of risk the prospect is comfortable with is ascertained during the ‘diagnosis’. A ‘qualification’ of the prospect by the expert, after the gathering of relevant information is critical. 'Qualification’ is the process of establishing whether the financial advisor has access to the appropriate financial tools with benefits that will perfectly match the personal circumstances and financial needs of the prospect, giving regard to various factors, including the prospect's budget. It embraces a decision as to whether or not the financial advisor is dealing with the right prospect. This is a stage that can distinguish the true expert from the fake.

Integrity and trust must underpin the financial advising role, and one has to be really wary of who he/she asks for advice from. A good financial advisor is supposed to be your helper, your guide and your teacher, in your journey towards your financial goal. Needless to say he/she must have and be seen to have sufficient knowledge in the field of finance and investments, and must be abreast of trends in the financial markets.

There are several tell-tale clues of a sleazy financial advisor. One who has picked up skills from the field and not certified is very likely to be unprofessional in his/her dealings. The chances are good that securities/shares recommended will be appropriate, if the financial advisor or the company he/she works for is not tied to or totally independent of the company whose securities/shares are offered. Steer clear of financial advisors who do not spend enough time to get to know what your real financial needs are. Such advisors will come off as wanting to just get the commission they are entitled to in their dealings with you, and not actually interested in helping and guiding you to achieve your financial goal. If you are not the right prospect, a ‘true’ expert will candidly let you know, hopefully at the ‘qualification’ stage or otherwise, as soon as it dawns on him/her.

A thorough research into the company the advisor works for, will be a step in the right direction. It will be a bonus if you will be chanced to have a chat with some of his/her customers chosen at random, to assist you to get a feel of the kind of service you may get. Note that it is not just the service you get during the sale or dealings that matters, but more so the after-transaction service.

The financial markets are very dynamic, and it is necessary that one’s personal circumstances and financial situation are regularly reviewed by the advisor, and any necessary changes to the financial strategy implemented with ample speed and agility, to guarantee the attainment of financial objectives. A good advisor must progressively add value to the client.

David Opoku
BA Hons. in Accounting and Finance (Currently specializing in Financial Advising)

I have a BA Hons. degree in Accounting and Finance. I am currently specializing in Financial planning.

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