Trusting a financial advisor is easier when they’re wearing a business suit. A well-tailored hull whispers success and credibility, before you even start trying to navigate the financial waters with them.
I’m reminded of the commercial where a DJ is transformed into a financial advisor by receiving a haircut and a fancy suit. He’s then placed in a plush conference room, located in an investment firm. He meets with clients and starts throwing out financial jargon. The clients eat it up, and are ready to invest with him. Why wouldn’t they? The financial literacy in our country is so low that if someone looks and sounds like an advisor, we’ll toss money at them, hoping they’ll put our hard-earned dollars to work better than we could. Of course, the reality is that not everyone in a suit has your best interests at heart.
When money is involved, conflicts of interest are bound to surface. New fiduciary regulations will help plug the publicized $17 billion leak in retirement savings that pour out in the form of excessive fees every year, but truth be told, the regulations don’t go far enough. They were watered down in response to heavy backlash from the financial industry. More importantly though, crooked financial advisors will always exist as long as there are ill-informed customers in the marketplace.
How do you know if your financial advisor is ripping you off? Fortunately, enough crooks are caught to establish patterns and tell-tale signs of when you should take your money and run the other way, before your advisor does the same to you.
Let’s take a look at six signs your financial advisor is ripping you off, courtesy of the Financial Industry Regulatory Authority (FINRA).