9 Financial Adviser Pick-Up Lines to Watch Out For

Decode financial adviser promises before trusting a professional with your finances.

By Christine Larson

Choosing a Financial Adviser

Three things every woman over 40 needs: a doctor who returns calls, a brutally frank hairdresser, and a trustworthy financial adviser. Guess which is toughest to find?

It’s not that there’s a shortage of peddlers eager to offer their two cents in exchange for yours. The number of people billing themselves as personal financial advisers more than doubled from 2000 to 2004, according to federal statistics. But a staggering number of these apparent experts are simply salespeople for insurance or brokerage firms. Or they cater to the ultrarich, charging fees that mere mortals would prefer to spend on, say, a round-the-world cruise. So, should you bother? Actually, yes.

In our 20s and 30s, managing money ranked far below landing a raise or getting a mortgage. After 40, complications like college tuition, aging parents, and upcoming retirement make us yearn for shrewd guidance. Before she turned 40, Brenda Rinard, a manager at Stanford University, was struck by the realization that she was at her peak earning powers, and that she’d probably outlive her husband. Rinard, now 44, and her husband found a financial adviser who recommended they buy a house instead of the stocks they’d earmarked. Good call: The house has nearly doubled in value; the stocks have tanked.

Everyone can benefit from a checkup, whether it’s advice on one investment or on your whole financial picture. But choose your adviser carefully. Here’s our gloss on some of the most alluring pickup lines — and the best way to respond.

1. "The first one’s free."

It works for drug dealers, and it works for some financial advisers. If you keep coming back for more, both stand to profit. But they don’t necessarily have your best interests at heart. This offer is best translated as "Let me have an hour of your precious time to make a sales pitch." If the person’s title is "financial consultant," "financial adviser," or "investment consultant," he or she is most likely a registered representative (translation: salesperson) for a brokerage whose priority is to sell stocks and earn commissions.

Likewise, a "chartered financial consultant" is an insurance agent. At a "free consultation," she may offer valuable information, but she’s likely to discover — surprise! — that you need insurance. And she may suggest policies (permanent or whole-life, the kind that include insurance and investment components) to solve almost any problem: Tax issues? This policy has tax advantages! Want to retire? This one has an annuity!

Sarah Robertson, 40, an emergency room physician in Sacramento, California, went to a free meeting with a consultant her colleagues had raved about: "He kept insisting on selling me life insurance. I kept explaining that I didn’t have kids. He just wouldn’t listen."

The Comeback

"How are you paid?" Brokers and insurance agents earn commissions. Financial planners can charge fees (hourly, flat, or retainer), work for commissions, or take a percentage of the assets they manage. Hybrid, or fee-based, advisers may receive both fees and commissions.

Any professional can provide good advice, and a commission-based adviser could cost less. (You pay an average of .72 percent of assets in commission-based accounts; .89 percent in fee-based accounts; 1 percent or more annually for fee-only advisers.) The real danger doesn’t lie in paying commissions or fees, but in failing to understand what might motivate an adviser’s recommendations.

2. "Let me worry for you."

Women seem especially vulnerable to this comforting line. In a study of people who bought mutual funds, for example, 32 percent of women (and 23 percent of men) said they relied solely on a professional’s recommendation, without doing any additional research, according to the Consumer Federation of America, a watchdog group.

Even with a great adviser, you need to ask questions, read up on anything recommended, and look at the level of risk. If you cede control, you’re likely to regret it.

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