5 sneaky ways financial planners deceive seniors
There are some unscrupulous financial planners out there who could be giving you bad advice. Here are a few tricks to look out for.
1. Starting with an easy topic
Most people are able to understand relatively simple financial issues, like paying back a credit card. However, once it moves up to complex things like superannuation investments, it’s not so simple. Dodgy planners could give you good advice on something simple to build your trust, before giving you bad advice on a complicated issue that you are less likely to understand. Always ask questions, even if they’ve given you good advice before.
2. Displaying lots of qualifications
Research shows that we are inherently more likely to trust someone – and their advice – when we believe them to be more qualified. Financial planners could display lots of certificates or notices of qualification in front of their client, so they are more inclined to trust them. Even if the qualifications are real, their advice could still be bad. Don’t be overwhelmed by the paper.
3. Promoting illegal investment schemes
As unbelievable as it sounds, unfortunately some financial planners have been known to advise people to invest in illegal schemes. This can result in losing all your money and even potentially being investigated for your involvement in such a scheme. Ask to see all of the information about a suggested scheme and, if you still feel unsure, do some of your own research.
4. Playing for both teams
A financial planner should be an independent party working only for you, not for the investments or institutions they recommend. A number of planners have been caught and convicted of offering advice that benefited them through kickbacks or payments from banks and brokerage firms. Insist that your planner takes you through all of their professional connections, discloses any obligations and explains where their fees come from.
5. Charging money for nothing
This might be the simplest one of all, but some operators will charge you fees and simply not do anything. You need to make sure you know exactly how much you are paying and what you are getting for that. Don’t be afraid to ask for regular updates or statements to see where your money is going.
Have you ever had an issue with a financial planner?