Who can you really trust?
How to find a financial advisor that will act in your best interests
How often would you like your financial advisor to think of what’s best for you when giving you financial advice? Half of the time? All of the time? It almost seems like a silly question to ask; why would you say anything less than “all of the time?” The whole point of hiring an advisor is to have someone you can trust to help you make the best choices possible with your money.
The sad truth is that many financial advisors don’t view this as the primary function of their job.
Out of the 310,000 financial advisors in the US, how many do you think are required to act in your best interest? 50%? 25%? The shocking truth is that less than 10% of all financial advisors in the United States follow the fiduciary standard — which legally requires financial advisors to put your interests ahead of their own.
It gets even scarier. Of the 10% of financial advisors who are fiduciaries, many are dually registered — meaning they can act as both a broker and a fiduciary. Legally, they don’t even need to notify you of their dual status, or whether they’re acting as a fiduciary or a broker at any given time! Talk about trust issues; would you ever go see a doctor who is only required to give you “good” medical advice during half of your visit? (And she doesn’t have to tell you which half of the visit.)
If you can’t trust 90% of financial advisors to act in your best interests, and many of the remaining 10% will only act in your best interests some of the time, then who can you trust?
That’s just the question Tony set out to answer when he wrote Unshakeable. Designed as your go-to financial freedom playbook, Unshakeable gives investors the knowledge they need to be truly unshakeable — unfazed by financial winters, prepared for anything, and wise enough to know who they can trust and who they can’t.
Having someone by your side who you can count on to give you the best advice for your money is a key part in planning for the financial future you want. That’s why it’s so important that you make sure your financial advisor — even a registered fiduciary — keeps you on track, and doesn’t prioritize their own needs over yours.
Even though the numbers look stacked against you, it’s very possible to find a trustworthy financial advisor. There are over 5,000 firms and individuals in the US that will act in your best interest.
In this episode of The Unshakeable Podcast, Richard Bradley sits down with Tony and Peter Mallouk to explore the process of finding a financial advisor you can trust and how to identify the ways your financial advisor may be working for personal gain, instead of for you.
SHOW NOTES
[0:52] Richard wants to talk about the continuous battle between fiduciary advisors and the brokerage community
[01:22] Even fiduciaries have figured out how to operate in legal grey areas
[01:28] This episode will give listener the opportunity to figure out what their own financial advisor is
[01:53] Do I want someone that’s legally required to put my interests first, or do I want to hope that someone I like, within a firm that doesn’t require it, will do so?
[02:35] Of the 310,000 people in the financial community, 90% of them are brokers
[02:50] – Only 10% are legally required to put your interests first – Registered Investment Advisor (RIA)
[02:57] Some, however, are dual-registered. They are wearing both hats, but how is that possible?
[04:04] Switching hats in the middle of a conversation
[05:03] It’s a shame that it happens in the US. In Australia, UK, etc. all brokers have to be RIAs
[05:25] This is unique to the US. Why? Because of the powerful lobby
[07:30] You need an RIA who is NOT affiliated with a firm
[08:02] What are the right questions to ask?
[08:29] Don’t do the same thing and expect a different outcome. You have the financial advisor that you deserve. But there are plenty of great firms. There are 5,000 that are not dual-registered.
[09:06] The 7 questions you should ask
[10:12] What if you have personal connection to your advisor? Remember: Your first loyalty should be to your family.
[11:05] Hiding commissions – they call them “consulting fees”
[11:28] They’ll refer to a “portfolio manager” and add another .25% — but it’s still them
[12:03] You should be paying 1% or less, nothing above that
[12:53] Every 1% more is 10 year’s lost in retirement income – could be the difference between financial freedom and financial insecurity
[13:35] How do you make the move to another firm/advisor? Myth: It’s difficult. Truth: It’s easy
[13:47] Peter: Perception that everything is sold — funds move over as is. No taxes.
[14:20] Within a few weeks, the new advisor should be holding some, but making recommendations on other assets
[15:11] Money is not just money; it’s emotion. Everything has to be done customized for the individual.
[16:15] It’s about maximizing growth, but you also need to know what you’re aiming for. What is your goal?
[17:09] How do you want your money to work for you? Long-term plan. Maximize your dollars.
[18:32] What’s going to fulfill you? Not just about necessities of retirement
[18:42] Many people who don’t have to work anymore still do! Not everyone wants to retire!
[20:11] Checklists in the book that will help you uncover who your financial advisor is
[21:29] Where will my money be held?
[21:52] Don’t EVER give an advisor your money
[22:16] Most advisors do NOT take custody of the money — they are held it elsewhere and the advisor only has the ability to manage it, not remove it
[22:42] Don’t ever let an advisor take custody of your money
[22:54] Majority of scams like Bernie Madoff are are affinity scams – they scam people they know
[23:15] The three C’s: Custody, Conflict, Competence
[24:37] Referrals are valuable because then you can feel confident in their skill set & experience
[24:52] What to look out for in your statements
[25:09] Be wary of finding the advisor’s own funds – look into the fund names and who owns them
[26:12] Closing remarks
Legal Disclosure: Tony Robbins is a board member and Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning.
