MoneyDo: Audit The Financial Advice You’re Receiving
In the financial world, audits are a harsh – but necessary – reality. When you audit, you attempt to cast light into every corner of your balance sheet to make sure you can account for the source and flow of your money.
This week, we’re suggesting you perform an audit – but instead of looking at your balance sheet, audit the advice you’re getting and who is giving it to you.
- Some people find that much of their advice is coming from people who have may not be professionals.
- A good audit doesn’t mean you have to ignore friends and family who give tips – but understand their financial background, and why they may be giving advice.
- Friends and family who appear wealthier than you may not be. And even if they do have more money than you, that doesn’t mean their advice is good for you.
- Even if the person you’re talking to is a professional, they may not be focused on your best interest. A recent study revealed that nearly half of Americans believe financial advisers are legally required to act in their best interest. Unfortunately, that’s just not true. The vast majority of financial professionals are not required to act in your best interest.
- Not every person who charges commissions or sells financial products gives bad advice. But commissions do present a potential conflict of interest, and you should be aware that the advice you’re receiving may only be “suitable” for you, but not what’s best for you.
- Professional designations and certifications are signs of knowledge, but don’t mean that the advice you’re getting is in your best interest.
Your advice audit may be less comfortable than a real audit, but it may take less time. The minutes you take to discover how you make your decisions could easily turn into a happier future.