Selecting a Financial Consultant - Debunking the Myth

In your efforts to manage your cash and arrange for financial security, are you sometimes persuaded to get a product or engage a consultant's services on the basis of claims such as for example:

"This can be the best financial product in the complete industry."
"We are the very best financial services company."
"I am the best Financial Consultant in the business."

Such statements are not uncommon in the financial services industry, just how do you decide who to trust or which lender to place your organization with? You may be grappling with this issue once you graduate and start planning your finances or simply nonetheless as you take stock of one's retirement pans.

Let us look at these common statements to acquire a clearer picture of what's truth or myth:

1. "HERE IS THE BEST FINANCIAL PRODUCT AVAILABLE IN THE MARKET"

There is no one-size-fits-all product on the market. What is suitable for one person may be unsuitable for another. A professional Financial Consultant should gather information regarding your financial needs and status before making any recommendation. You would expect your physician to prescribe medication only after he's got made a diagnosis, so have the same expectations of your financial consultant.

Ask  Learn more : "On which basis is this recommendation ideal for me?"

2. "THE MORE AWARDS THE HIGHER"

Awards do give an indication on a Financial Consultant's performance. However, do keep in mind that awards are mainly measured by sales performance. Just as a fast food chain that sells the most burgers might not have the best cooks, a Financial Consultant who has achieved a higher sales performance might not necessarily be the the most suitable person for you.

Ask your consultant: "How did you qualify for the awards?"

3. "WE ARE THE VERY BEST FINANCIAL SERVICES COMPANY"

Reputation and branding matter but 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 function as best and that depends upon the basis of your measurement, for example, new business sales or assets under management. Just like a hospital that has probably the most number of patients will not mean the doctor you are seeing is a good.

Ask your consultant: "Best in what area?"

4. "WE ARE ABLE TO SOURCE FOR YOU THE BEST PRODUCT FROM DIFFERENT COMPANIES"

That would be possible only when a Financial Consultant might have access to all financial loans from all finance 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 own pool of Financial Consultants because the only distribution channel for some of their products. In addition, competing financial products usually have different pros and cons. Make certain the financial product recommended is the best suited for you rather than the one that is best for the Financial Consultant in terms of remuneration.

Ask your consultant: "How are you remunerated for the various options listed in your recommendations?"

When you come across these statements, make sure you ask the consultant to back them up. A good financial consultant will assist you to make investment decisions that are appropriate for your needs, and these change in accordance with what stage of your life you are at.