How do people fall short of achieving their financial goals over and over again? Identifying your goal is one thing, but how best to go about it in a complex financial industry can be daunting. Few can work out how to do it on their own. If you fail to associate finance with appropriate advice, you risk making the wrong decision.
Moreover, a lot of care is required to navigate the complexity of the products and services available in the market. Because service provision is murky, you have to separate advice provider relations from the product itself.
In all cases, question any financial information you receive and view any advice skeptically. Of concern at the back of your mind is the relevance of specific products to your particular needs. Sometimes, the right choice even when ambushed with seemingly relevant and compelling information is to practice restraint.
As a rule, bear in mind the reason for seeking financial advice is to identify what suits your needs. Secondary to this is gathering additional information to convince you to buy a particular product. In many cases, it may appear the financial adviser is going into too much trouble to encourage you to purchase a product. Nevertheless, you can always say NO.
Ignorance is the Biggest Risk
Furthermore, entitled rights in a financial advice package differ by type of product. Hence, verify with relevant independent authority your rights vis a vis given product. It follows that purchasing a product in the absence of advice may result in limited entitlement. In effect, you can decide to go it alone, but it is better to safeguard your investment by going for proper guidance.
Ultimately, product knowledge does not necessarily constitute correct information. As a result, financial advice falls into two groups: Independent and Tied.
Independent Financial Services
What kind of product information can you expect from an independent financial advisor? When it comes to such consultants, product neutrality plays a significant role. Besides, they will not hold or constrain you to a single product from a specific company. In this case, they leave you to make your own decision for what seems right for you.
In addition to letting you make an independent decision, what other favorable characteristics do independent services entail?
- They offer advice on a wide range of products
- Verified credibility to the array of financial products and companies
- Strict compliance with the industry-specific code of conduct
So, how can you tell service is entirely independent of product interest? The only way is if the resource person abstains from pushing you to settle on a specific choice. You, therefore, have to take measures to obtain financial advice from one source and make an unconstrained purchase.
Tied Agency Services
On the other hand, Tied Agencies directly sell and provide information about products of just one firm. They may not necessarily work for that company, although they possess strong product knowledge and established working relations with the organizations. For this reason, they can get you a favorable deal due to an exclusive connection with the provider.
Also, they can guide you on product choices that suit your needs with a stated level of honesty. In most cases, Tied Agents work on commission. Such an arrangement may be subject to change with the proposed agreement between agents and companies moving to fix a flat rate. Should you feel that the products aren't favorable, you have no obligation to purchase.
As seen above, it is possible for your adviser to get you an excellent package. Whenever you're considering the availed information, it is prudent to establish the adviser's standpoint. In all likelihood, it influences the kind of info they pass to you.