Audit The Financial Advice You’re Receiving
In the business world, audits are a harsh – but necessary – reality. Audits attempt to cast light into every corner of the balance sheet to make sure a company can account for the source and flow of 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 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 previous 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 meet a fiduciary standard of care.
• 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 in your best interest.
• Professional designations and certifications are often seen as signs of experience or expertise.
Understand what each designation means and the requirements to obtain and maintain the certification.
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.