Monday, April 18th, 2016 - Short The Crash

Most of us are aware that we need to prepare for our retirement. Usually it is a very good idea to seek out a professional financial adviser. Good advice is essential and can really pay off financially. That being said, we need to be aware that not all advisers are created equal. Some advisers are unethical and only act out of self interest. Fortunately you don’t have to worry because, I am going to tell you what to be on the look out for when approaching a financial adviser. So without further ado, here are the 5 signs of a dodgy financial adviser!

4 Signs Of A Dodgy Financial Adviser.Donnie is ready to take your call!
  1. Selling The Appointment First.

The adviser wants you to meet with them for an “obligation free chat”. They really push the meeting, but stress that it is just an “information session”. If you really knew what was in store for you, you probably wouldn’t turn up at all but that information session has piqued your curiosity. What’s the harm, it’s free right? The trick here is to make sure you believe that you are going in for a casual chat. All they want at this stage is for you to show up with your guard down. Once you are there though, they plan on making the most of the “opportunity”. You may also notice that they will put the utmost importance on making sure that your life partner attends the appointment with you. They want to prevent you from saying something like, “ I need to discuss it with my wife before I commit”. That is a pretty solid “out” that they don’t want you to have up your sleeve. If they have both decision makers of the relationship in front of them they will have a better chance of shutting down your objections on the spot. So initially, all they want is a chat with the both of you. If they push anything else before the appointment takes place, there is a good chance that you will cancel the appointment. Another favorite is the free “financial checkup” and that is going to be the only reason for the appointment. Do you really think that advisers go around giving free advice like this and want nothing in return? No, me either!

The actual appointment will not go as you expected. The unethical adviser has practiced in front of the mirror hundreds of times. They will have a series of “word tracks” which will be delivered so naturally that you will think it is a natural conversation. The word tracks are designed to manipulate you, excite you and shut down any objections. Highly manipulative advisers are exceedingly difficult to say no to. If you feel that you are losing control of the appointment….just walk out.

2. Decision Must Be Made Now

An unethical financial adviser will have a devious plan to build urgency and excitement. They will give reasons why you must act today. They will also make you feel as though ‘thinking it over’ is foolish. The adviser will have a goal of ‘closing you’ on the day of the appointment. They are all too aware that if you walk out without signing, the odds increase that you will do nothing at all or worse still, choose another adviser.

If they told you upfront of their intention to sell you investment products on the day, you would go in with a very defensive mindset. Despite assuring you that there will be no selling, be under no such illusion! The dodgy adviser has prepared ahead of time and is ready to put you through an emotional roller coaster that will be very difficult to get off!

3. Emotional manipulation

The unethical adviser knows all the right buttons to push. Greed is one button that they know investors are all too susceptible to. All investors want to make a big return after all. Be wary of anybody promising amazing returns. If it looks too good to be true, it is! They will also make you fearful of losing out by building a sense of urgency. The dodgy financial adviser has only one opportunity left and if you don’t sign, you will miss out on this offer for good. Keep it in your mind at that point that you had been promised an obligation free chat. If you feel pressured here, it may pay to remind the adviser of what they said to you prior to the appointment. Take the information you need and walk out if you feel that you are being manipulated in this way.

4. Displays Of Wealth

Some advisers choose opulent surroundings and other displays of wealth to seduce investors. For example, they might pick you up in a white Rolls Royce and take you to a mansion or penthouse suite of a 5 star hotel. The purpose of this ploy is to give an impression of success. This is a huge red flag and can sometimes be the markings of the worst of the worst. These particular scoundrels want you to have a taste of their (rented) luxurious lifestyle. They want you to feel that this life is finally in your grasp and that only they have to keys to realising this dream life. Of course it is all just another ploy to manipulate you. If you ever experience something like this you need to be very cautious. You may actually be in the presence of somebody worse than an unethical adviser. You may be in the presence of a criminal con-artist. A good adviser is usually modest and financially wise. Therefore they are likely to view such financial displays as wasteful and unnecessary. If you feel that you are being seduced by ostentatious displays of wealth, walk away…..actually you probably need to run away at this point!

5. No Qualifications

Generally speaking the higher the qualifications, the more committed an adviser is to ethical conduct. The highest qualifications and associations have stringent standards and are difficult to obtain and join. Most dodgy advisers only bother to possess the bare minimum. However, there are always exceptions to this rule. Plenty of advisers with minimal qualifications are ethical operators. There are also cases where highly qualified advisers have turned out to be completely unethical.

With that being said, here are some of the highest qualifications that people operating in the financial services field can possess.

CFP – Certified Financial Planner. This certification is awarded from theFinancial Planning Association of Australia and is the “Gold Standard” in the industry.

Other “Good” Qualifications – In addition to being a CFP, an adviser may also be an accountant. I am a big fan of CFP’s with accounting qualifications as well. Accountants are generally “risk averse” by nature and this can be of additional benefit when it comes to handling other peoples money. Your adviser may be a Certified Practicing Accountant or a Chartered Accountant as well as a Certified Financial Planner. It is just my opinion, but I would consider such a planner to be exceptionally qualified to offer financial advice.

So there you have it, the 5 signs of a Dodgy Financial Adviser. If you know someone, thinking of using an adviser, don’t forget to share this article with them. It may save them from financial ruin!

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Short The Crash


Short The Crash - Financial Advisers Watchdog

A blog focussed on ethical standards among financial advisers. We reward ethical practitioners and discuss the tactics of their less than ethical counterparts.


Julian Leahy
P: +61422619519
W: www.shortthecrash.com.au

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Financial Planning, Investing, Financial Advice

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