Family Finance

Financial Advice

What You Need to Know

I found myself thinking about what it actually takes to be a good financial professional. I started considering the importance of age, education, experience, and certifications first. I personally believe that age has nothing to do with one’s qualifications, and certifications generally apply to a specific area. Educational background and experience certainly are up on the list of important things to consider. Then I started thinking about all of the horror stories I have heard throughout my career and realized that it is the intangibles that truly make someone stand out from the rest.

Yes, intangibles: qualities that cannot be quantified. Anyone can work in an industry for a number of years, or attain a certain professional achievement. The thing is, however, there are just some qualities that are even more important. Perhaps at the top of the list is honesty. It may sound trivial, but a majority of white-collar crimes arise out of a lack of honesty. The ability to be transparent with a client as to one’s true intentions and desires: Is a client’s interests truly best served investing in a certain mutual fund or is it because the fund carries a hefty load that will benefit the adviser’s interests? It can be as simple as padding fees on a mortgage loan, and claiming that the fees are a “necessary part of the application process”. Transparency and honesty are the foundation of trust in any relationship, especially one where the client’s money is involved.

Another key trait that a truly special financial professional will possess is the ability to communicate. This doesn’t mean that the professional has to be a charmer. No, this means that the professional has to be able to actually listen: listen to a client’s background, their needs, desires, concerns, confusion, etc. Once all of the pertinent information has been obtained, the next step is being able to communicate back to the client what the plan of action is going to be, but in such a way that the client will not only feel completely comfortable, they will actually understand everything. A major point of concern with people who work with any kind of professional adviser is the inability to escape the constant use of industry jargon, which only leads to more confusion.

What it comes down to it, is that a business relationship is essentially the same as a personal relationship. Aside from education and experience, those who are able to be truthful, communicative, and make time for each of their clients will be successful. Simply possessing knowledge and having years of experience alone are no longer all that define a truly good financial professional.

Client Meeting

What it comes down to it, is that a business relationship is essentially the same as a personal relationship.


Now there are some basic principles that can be used as blanket statements, such as save for an emergency, pay bills when they are due, live within your means, etc. but telling people in general to avoid using credit at all costs, or that they need to save 20% of their net pay is just irresponsible. Along the same lines, it is simply wrong to say that all people just starting out should have a 100% exposure to stocks, while a person already in retirement should switch to a 100% bond portfolio.

Ideally, what should happen is that there should be an interview process in which the person dispensing the advice gets an overall sense of the seeker’s situation, regardless of whether it is retirement or college planning, debt reduction, bankruptcy avoidance, etc. finding out what led them to where they are now as well as where they want to be in the future. Then, and only then can someone truly give informed and targeted advice. No two situations are exactly identical, as people have differing levels of need, as well as differing levels of knowledge. It is not as simple as saying “everyone should….” because of these differences and the necessity to recognize and understand the uniqueness of each situation.

Of course, not everyone is a financial adviser, planner, etc. but there is still a need to be responsible when giving advice. One cannot advise others on a certain diet before you discover their religion or any medical conditions related to food that could affect their ability to maintain such a plan. Nor would anyone give driving directions before ascertaining whether or not the recipient is interested in getting to their desired destination in a speedy manner or if would like to make stops at certain points of interest. The same holds true for financial advice. No matter who is dispensing the advice, certain facts need to be reveled in order to get those in need where they would like to be. That cannot be accomplished by making blanket generalizations and incorporating personal beliefs blindly. It simply is not right nor is it in the best interest of the people in need.

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