In your efforts to manage your money and plan for financial security, are you sometimes persuaded to buy something or engage a consultant's services on the basis of claims such as:
"This is the best financial product in the complete industry."
"We are the best financial services company."
"I am the best Financial Consultant available."
Such statements aren't uncommon in the financial services industry, just how do you decide who to trust or which lender to place your organization with? You can be grappling with this particular issue when you graduate and start planning your finances or perhaps nonetheless as you take stock of one's retirement pans.
Why don't we look at these common statements to acquire a clearer picture of what's truth or myth:
1. "THIS IS ACTUALLY THE BEST FINANCIAL PRODUCT ON THE MARKET"
There is absolutely no one-size-fits-all product on the market. What is suitable for one person may be unsuitable for another. A specialist Financial Consultant should gather information about your financial needs and status prior to making any recommendation. You'll expect your physician to prescribe medication only after he has made an analysis, so have exactly the same expectations of one's financial consultant.
Ask your consultant: "On what basis is this recommendation suitable for me?"
2. "THE MORE AWARDS THE BETTER"
Awards do give Finance Prop on a Financial Consultant's performance. However, remember that awards are mainly measured by sales performance. In the same way a fast food chain that sells the most burgers may not have the very best cooks, a Financial Consultant who has achieved a high sales performance might not necessarily be the most suitable person for you.
Ask your consultant: "How did you qualify for the awards?"
3. "WE ARE THE BEST FINANCIAL SERVICES COMPANY"
Reputation and branding matter but the key question is how much emphasis you should put on them. Different financial services companies claim to function as best, so that is really the best? Well, they could all be the best and that depends on the basis of one's measurement, for example, new business sales or assets under management. Just like a hospital that has the most number of patients does not mean the doctor that you are seeing is best.
Ask your consultant: "Best in what area?"
4. "WE CAN SOURCE FOR YOU THE VERY BEST PRODUCT FROM DIFFERENT COMPANIES"
That might be possible only if a Financial Consultant can have access to all financial loans from all financial institutions and the financial products can be easily in comparison to one another. Unfortunately, like the theory of perfect competition in Economics, this may prove elusive in the real world. Major financial services companies still use their very own pool of Financial Consultants as the only distribution channel for most of their products. Furthermore, competing financial products will often have different advantages and disadvantages. Make certain the financial product recommended is the greatest suited for you and not the one that is most beneficial for the Financial Consultant when it comes to remuneration.
Ask your consultant: "How are you currently remunerated for the various options listed in your recommendations?"
When you come across these statements, ensure you ask the consultant to back them up. A good financial consultant will assist you to make investment decisions that are appropriate for your preferences, and these change according to what stage of your life you are at.