Choosing your financial advisor, like any other professional, is by no means simple. The basic assumption is that a person is not prepared in the area for which he seeks assistance; otherwise, he would do it himself. How can you then evaluate a person who knows more about us on a topic than us? It is far from simple. But we tried to provide some food for thought.
The first step in choosing the investment advisors is to realize that you need a financial advisor. Which is already far from obvious? In addition to this, it is necessary to find a qualified, reliable person who inspires confidence in us. Possibly always available and that does not cost a fortune.
In addition, the saver, whether he is an entrepreneur, an employee, or a pensioner, does not have an infinite amount of time. It is unthinkable to meet 5-6 different consultants, perhaps for 2-3 times each, in order to clarify ideas and then choose. It is, therefore, necessary to put into practice some tricks in order to make the best possible choice.
Why choose a financial advisor
The current market situation offers interest rates reduced to the minimum terms, Stock Exchanges, and bubbles destined to burst. If years ago an average family could do it by itself and rely on BTp, now they offer infinitesimal or even negative returns.
Why choose an independent financial advisor
Once you understand the need to use a professional to manage your savings, you need to choose between an independent consultant and one with a mandate from an institution. In both categories, there are serious, honest, and prepared people, but the differences between the two are obvious.
The basic assumption is that the relationship between the credit institution and the client can never be idyllic since the interest of the bank ends where the client’s interest begins. Therefore, the commercial staff of a bank presents significant conflicts of interest.
If you do not pay for a product, you are the product
Driven by budgetary logic, as well as by the way in which they are remunerated, former financial advisors, now “consultants qualified in offering off-site,” are not always able to put customer interest first.
Relying on the staff of a bank, the customer remunerates the manager, agent, and intermediary indirectly, or through the high commissions included in the various financial products. Moreover, these products are usually chosen only from those of the group to which they belong, for obvious reasons.
The independent financial advisor, on the other hand, is paid on a fee and is independent of any company. Its activity only concerns the operational investment indications, which the client will carry out with his intermediary. It, therefore, has no interest in recommending a specific product instead of another and operates solely in the interests of the customer.
It can, therefore, select products from multiple investment houses and is not subject to budgetary logic. The costs are clear and explained a priori and allow the customer to have a clear idea of what the salary will go to pay.
The asset allocation distortion
The way a former financial advisor is remunerated can also influence the asset allocation of the portfolio. A riskier product usually has a higher cost. Considering that the consultant is remunerated with a percentage of the costs of managing the fund, it is easy to understand how this can lead to the construction of too risky portfolios.