In your time and efforts to manage your money and plan for financial security, are you currently sometimes persuaded to buy a product or engage a consultant's services based on claims such as:
"This can be a best financial product in the complete industry."
"We are the very best financial services company."
"I am the very best Financial Consultant available."
Such statements are not uncommon in the financial services industry, just how do you decide who to trust or which financial institution to place your business with? You can be grappling with this issue once you graduate and start planning your finances or simply even now as you take stock of one's retirement pans.
Why don't we look at these common statements to obtain a clearer picture of what is truth or myth:
1. "THIS IS THE BEST FINANCIAL PRODUCT ON THE MARKET"
There is absolutely no one-size-fits-all product on the market. What is suitable for one person could be unsuitable for another. A specialist Financial Consultant should gather information about your financial needs and status prior to making any recommendation. You would expect your doctor to prescribe medication only after he has made a diagnosis, so have the same expectations of your financial consultant.
Ask your consultant: "On which basis is this recommendation ideal for me?"
2. "THE MORE AWARDS THE BETTER"
Awards do give a sign on a Financial Consultant's performance. However, do keep in mind that awards are mainly measured by sales performance. In the same way an easy food chain that sells probably the most burgers might not have the best cooks, a Financial Consultant who has achieved a high sales performance might not necessarily be the most suitable person for you.
Ask your consultant: "How did you be eligible for the awards?"
3. "WE ARE THE BEST FINANCIAL SERVICES COMPANY"
Reputation and branding matter however the key question is just how much emphasis you should place on them. Different financial services companies claim to function as best, so which is actually the best? Well, they might all be the best and that depends upon the basis of your measurement, for example, new business sales or assets under management. Just like accredited investor opportunities that has probably the most number of patients does not mean the doctor that you are seeing is a good.
Ask your consultant: "Best in what area?"
4. "WE ARE ABLE TO SOURCE FOR YOU THE VERY BEST PRODUCT FROM DIFFERENT COMPANIES"
That might be possible only if a Financial Consultant might have access to all financial loans from all financial institutions and the financial loans can be easily in comparison to one another. Unfortunately, just like the theory of perfect competition in Economics, this may prove elusive in real life. Major financial services companies still use their very own pool of Financial Consultants as the only distribution channel for most of their products. Furthermore, competing financial products will often have different advantages and disadvantages. Make sure the financial product recommended is a good suited for you rather than the one that is most beneficial for the Financial Consultant regarding remuneration.
Ask your consultant: "How are you currently remunerated for the different options listed in your recommendations?"
When you run into these statements, be sure you ask the consultant to back them up. An excellent financial consultant will assist you to make investment decisions that are appropriate for your preferences, and these change according to what stage you will ever have you are at.