While the subject of identifying helpful or harmfuland advice may on the surface appear to be rather complicated to say the least, much of it comes down to little more than common sense and logic.
For example, if and when an adviser was to tell a client of very average means in their 70s that they’d be better off putting pretty much everything they had into stocks, is will be a pretty sure-fire sign of inexperience, bias or restriction in terms of the advice they are able to offer.
But this is of course a relatively severe and extreme example of bad advice, so what can the average individual do in order to help identify and ideally avoid bad retirement advice when and where it is offered?
- First and foremost, be sure to choose an established and reputable financial adviser with a strong track record and the kinds of credentials that speak volumes. It sounds like a pretty obvious check to make and indeed it is, but the problem is that so many simply take things for granted and assume that every working financial adviser is of the same calibre – the truth being quite to the contrary.
- Prior to heeding the advice of any financial adviser, be sure to look into and indeed ask questions on the subject of exactly how much scope they have to play with when it comes to recommending products and services. The reason being that there will always be those that are quite severely bound by corporate ties and business relationships which in turn restrict both the advice and products they are permitted to offer.
- While it would be unfair to say that every financial adviser working on a commission basis only ever offers advice in accordance with their own best interests, commission-based financial advice is rarely as objective as the alternative. The reason being that to agree to large upfront fees of any kind is to essentially take care of the financial adviser’s side of the deal ahead of time after which anything that happens to you as the client has no bearing on their own outcome one way or the other.
- It’s never the nicest subject to broach and is therefore often skirted over, but it is nonetheless in your best interests and an important judgement of character to ask the adviser about both best and worst case scenarios. It’s the mark of a responsible advisor to discuss both positive and negative outcomes with honesty and transparency – those that do not have your best interests at heart will more often than not avoid the negatives and sell only the positives.
- Last but not least, never be afraid to ask any given financial adviser for references and case studies which illustrate exactly how they brought about their success stories. If possible, speak to those who have worked with the financial adviser before in order to find out in their own words exactly how beneficial and accurate there advice was.