How to Pick a Financial Advisor
“Americans lose $17 Billion every year from conflicting investment advise”
The EXECUTIVE OFFICE OF THE PRESIDENT OF THE UNITED STATES
As an investor, you want to achieve the highest possible returns on your investments while also managing risks. Choosing the right financial advisor is a critical part of that process, as your advisor will help you make important decisions about your investments. Unfortunately, not all financial advisors are created equal. Non-fiduciary or dually registered advisors can have a negative impact on your investments. If you ask your advisor if they are a fiduciary you want a clear “yes” and when you ask them if they are “dually registered” you want a clear “no”. We’ll explore the reasons why there really is only one good choice.
- Non-Fiduciary Advisors May Not Have Your Best Interests in Mind
Non-fiduciary advisors are not legally bound to act in their clients’ best interests. This means that they may be motivated by their own financial gain, rather than your best interests. Non-fiduciary advisors may be compensated through commissions or other incentives that could encourage them to recommend investments that are not in your best interests. This conflict of interest can lead to poor investment decisions, which can have a negative impact on your returns.
- Dually Registered Advisors May Have Conflicts of Interest
Dually registered advisors are licensed as both investment advisors and brokers. This means that they may be able to sell investment products for which they receive commissions, in addition to providing investment advice. This can create a conflict of interest, as dually registered advisors may be motivated to recommend products that generate higher commissions for themselves, rather than those that are best for their clients.
- Non-Fiduciary Advisors May Provide Inadequate Financial Planning Services
Non-fiduciary advisors may focus primarily on selling investment products, rather than providing comprehensive financial planning services. This means that they may not take into account all of the factors that could impact your investment decisions, such as taxes, estate planning, and risk management. Without a comprehensive financial plan, your investments may not be aligned with your overall financial goals.
- Non-Fiduciary Advisors May Provide Limited Investment Options
Non-fiduciary advisors may only offer a limited range of investment options, such as proprietary products or investments that provide higher commissions. This can limit your ability to diversify your investments and can increase your exposure to risk. Without a broad range of investment options, you may miss out on opportunities to achieve higher returns while managing your risk.
If you ask your advisor if they are a fiduciary you want a clear “yes” and if you ask them if they are “dually registered” you want a clear “no”.
In conclusion, choosing a non-fiduciary or dually registered advisor can have a negative impact on your investments. These advisors may not have your best interests in mind, may have conflicts of interest, may provide inadequate financial planning services, and may offer limited investment options. By contrast, working with a fiduciary advisor like Alpha Financial Nordic can help to ensure that your investments are aligned with your overall financial goals, are properly diversified, and are designed to help you achieve the highest possible returns while managing risk.
