Most experts recommend novice investors to engage financial advisor to help them achieve their financial goals. Yet how do we find someone whom we can trust? Over the years, I have met many financial consultants, some good, some down right bad. I would like to share with my readers some of my experience dealing with these jokers.
Many of the financial advisers I met carried with them big titles like Associate Director, Vice President, Sales Director, etc. A lot of them were also quite young. I think many of them suffered from the mistaken belief that if they carry big titles, customers will respect them more and will be more inclined to buy from them. Actually I don’t care about titles when I look for a financial consultant. To me, titles are just job designation. But normally I would look out for someone who is a Certified Financial Planner. I would give the fellow slightly more face-time.
Know your needs
Before you even sat down with the financial advisor, make sure you know what you need. Not all planners offer comprehensive advice tailored to your needs. Decide what you want and expect from the adviser. For example, last month, I was shopping around for a medical shield plan for my baby girl and invited a financial consultant to my home for a discussion. Instead of advising me on his company’s products, he enquired about the valuation of my home and asked about my pay cheque. I didn’t give him a split second chance and “thank you very much” within 20 minutes.
Find out how much they are paid
Don’t be shy to ask how much commissions or fees the financial adviser will collect from you. After all, its your hard-earned money and you have the rights to know. Some advisers I came across were evasive when I pressed them for the details. If your adviser tried to brush off your queries on the commissions or fees, always demand for the specified amount you are paying him. Otherwise, just walk away from the deal.
Don’t jump the gun
Many years ago, my insurance agent tried to convince me to purchase NTUC Income’s Growth Plan. He shared that he purchased it every few years as a form of retirement plan.
Indeed, I noted the many good things about this scheme but eventually didn’t take up the offer. This is because I don’t like the idea of tying up my money in insurance plans. I am still very young and I would rather learn how to invest and grow my money. I also like to keep some amount of cash for emergency uses.
It’s true that my projected return would be lower as compared to the Growth Plan but at least in emergency times, I can use the money without suffering monetary penalties. We all know that buying insurance is a long-term commitment and early redemption can incur huge losses.
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