Good vibrations: Three signs of quality advice
It’s hard to find a financial adviser you can trust. And even if you do, it’s almost impossible for most people to judge the quality of the advice they receive.
It’s difficult because of what economists call ‘information asymmetry’. There’s a power imbalance because there’s a difference between what your financial adviser knows and what you know.
It’s understandable to be cautious. As we’ve seen over and over again, if things go wrong with financial advice, they can go horribly wrong, leaving you unable to recover financially and emotionally.
But in our caution, we shouldn’t close ourselves off from the benefits of advice.
According to CoreData research, people who have an active relationship with a financial adviser are better off. They feel less financial stress, have better personal relationships, are healthier, wealthier, and are able to spend more and achieve more in their lives with less risk along the way.
Giving me excitations
In the end it’s not what you know that matters most when you’re choosing an adviser. It’s how you feel.
Here are three ways you should feel when you’re receiving quality advice.
1. You feel prioritised
Your adviser should serve you and you alone. They should be paid only by their clients and only for the advice that they give. There should be no other parties involved, trying to bias the advice.
This is often not the case. Historically, most financial advisers have simply been sales agents of financial institutions trying to sell their products.
That’s slowly changing, but bad practices still abound. Here’s the test: Is your adviser employed by a financial product provider? Does the practice receive asset-based fees calculated on the amount of money you have to invest?
If the answer is yes to either of these questions, then you’re probably not being prioritised in the relationship. Your adviser is serving other interests.
2. You feel heard
Warren Buffett’s first rule of investing is to “only invest in what you know”. It’s good advice.
That’s why it’s so important that your adviser is patient with you, giving you opportunities to ask questions. There’s no such thing as a silly question when you’re asking about your own money.
If you feel rushed in any way, or just not heard, then you’re probably not receiving quality advice.
3. You feel confident
When we feel more confident about our finances, our decisions improve. As our confidence grows, we feel better about what we’re doing, and it changes our behaviour. We get more involved, proactively learning more about our options and how things can be optimised.
If you’re receiving quality advice you will feel empowered and resilient, knowing that you understand what’s most important to your financial plan. You will know what you can control and what you can’t control, and what you need to change when things go off-track.
Not all financial advisers are the same and not all financial advice is the same.
At Daniel Crump Financial Planning, we’re self-employed advisers who have worked hard to avoid conflicts of interest. We’re not aligned with any product providers, paid only by our clients and we charge fixed fees for service.
We take the time to really understand you and what you’re trying to achieve. There is no rush. We make the effort to compare the possibilities and help you understand what you can and can’t achieve.
If you’d like to experience high quality advice first hand, give us a call. We’d love to help.
Daniel Crump is the founder of Daniel Crump Financial Planning. This article is general and does not consider your personal circumstances. If you would like advice specific to you, give us a call.
