FAQs Investors asked about financial advisors, analysts, and investors' profits with these brief answers each linked to a related detailed lesson and more FAQs related to stock market investing topics. The listed questions and answers are all from lessons in the White Top Investor course, Investment Choices of Superior Investors.
FAQs about financial and investment advisors from the lesson, Investing time or advisor time?
Should I invest myself or use an advisor?
Invest in yourself; your future is worth it.
A hard fact of financial life is that learning how to judge an advisor's quality takes as long as learning how to invest well. Advisors take a cut of your capital in good or bad markets, significantly impacting net long-term returns.
When the advisor is good, the choice is investing time or money. The answer directly and significantly impacts your immediate financial security, retirement comfort, and future wealth.
No-worry investors follow a simple step-by-step process to develop into knowledgeable long-term investors. By investing in knowledge, they patiently build wealth with lifetime returns exceeding any alternative.
Choose time and effort, or find a reputable advisor for lower returns.
See more details, discussion, and FAQs in this lesson, Investing time or advisor time?
When should I get a financial advisor?
Get a financial advisor when you need help putting money to work.
A fee-only financial planner is a good start for someone new to money management or investing. Such a meeting can be an excellent investment and a turning point in your financial future.
After all, money is lazy, has no loyalty, and is indifferent to you or your needs and wants. But money will do what you make it do, so you need to make it work for you!
The most successful investors are good money managers who take the time and effort to learn how to maximize their returns. A qualified financial advisor is an excellent second choice for those who need more knowledge or time.
For more details, discussion and FAQ see the lesson, Investing time or advisor time?
How should I prepare to meet a financial advisor?
Preparing to meet a financial advisor involves detailing your income, expenses, assets, and liabilities.
This to-do list can help,
1. Research your financial advisor choices,
2. Have an accurate 3-month record of earnings and expenses,
3. Have up-to-date statements of your income and balance sheet,
4. Be mentally and emotionally open to change and ready to learn,
5. Research, think through, and update your long-term financial goals,
6. Reflect on how your plans, investments, strategies, and risk management fit your life and lifestyle.
You will get the most value from meeting a financial advisor when you prepare in advance by having your facts, thoughts, and attitudes aligned.
See more details, discussion, and FAQs in this lesson: Investing time or advisor time?
Is it worth having a financial advisor?
Good financial advisors can add significant value, which gives investors a choice between using their time to invest or, at a higher cost, using an adviser's services to build wealth.
Investing on your own offers the best wealth-building opportunity for anyone who can invest well. Learning to do that takes time and effort.
If you don't take the time to learn how to build wealth by investing, the alternative is to pay the higher cost of using an advisor. The top clients achieve higher returns by learning from an advisor who helps them understand markets and investing.
See more details, discussion, and FAQs in this lesson:
Investing time or advisor time?
Time to invest or time for an advisor...is financial security important enough for you to spend the time to learn how to invest well?
How do I know I have a terrible financial advisor?
Lousy advisor behavior and performance add risk and aggravation to your life and future like these examples of bad behavior:
Calls or emails not returned,
Fail to inform or update clients,
They ignore the client's partner,
Investments always underperform,
They prioritize their interests over clients,
Communication feels dishonest or unclear,
The relationship feels strained or uncomfortable,
They dismiss the need for third-party custodians,
Every contact is to sell something or charge a fee,
They don't resolve client issues or answer questions,
Advice changes when markets and situations change,
They talk down, intimidate, and use confusing financial jargon.
Leave these aggravations and poor performance by changing to a quality advisor to achieve financial prosperity.
See more details, discussion, and FAQs in this lesson: Investing time or advisor time?
When should you talk to a financial advisor?
When you don't know how to put money to work for your purposes, talk to a financial advisor. Regular contact with an excellent financial advisor can add to your wealth and investing knowledge.
Independent, fee-only financial planners can provide some of the best services for individual investors. Qualified assistance ensures investors develop a solid financial plan as the foundation of their wealth-building.
A financial advisor can also help increase financial literacy, investing, and market knowledge. For anyone willing to invest the time and effort, the payoff can be a lifetime of building financial security, wealth, and retirement comfort.
See more details, discussion, and FAQs in this lesson, Investing time or advisor time?
What questions should I ask a financial advisor?
Ask these Twelve Big Questions For Financial Advisors.
1. Are you a fiduciary?
2. What are your fees?
3. Do you report results net of fees?
4. What services are included in your fees?
5. What commissions or incentives do you receive?
6. What are your qualifications?
7. What experience do you have?
8. How many clients do you have?
9. How often will we communicate?
10. Will our relationship be long-term?
11. What is your investment philosophy and plan?
12. Has your firm or anyone in it faced disciplinary or legal action?
Their reaction, explanation, and discussion of each question provide insight into their attitude and character. Should they avoid, not answer, or make you uncomfortable with their response to any question, look for another advisor.
For more details, discussion, and FAQs, see the lesson: Investing time or advisor time?
When should I leave my financial advisor?
A financial advisor can help or harm your financial security, retirement comfort, and wealth building. While some financial advisors add value, others earn more from a client's capital than the client. If your advisor and their firm take more than you make in return, fire them!
Investors have two choices to invest well for a lifetime of returns: learn how to do it yourself or seek the assistance and guidance of a reliable advisor. Although learning to invest well pays far more in the long run, it requires time and effort.
Your alternative is finding an honest and able advisor who produces net returns. Still, the costs mean lower net returns. Before entrusting them with your finances, thoroughly research and evaluate any prospective advisor, as outlined in the lesson.
See more details, discussion, and FAQs in this lesson: Investing time or advisor time?
FAQ about financial and investment advisors from the lesson, Media exposes advisor incompetence.
Are there reasons not to use a financial advisor?
Don't keep an advisor that is not working in your best interest.
The right financial advisor can be beneficial, but many need more essential investment knowledge. Your wealth is at risk with any advisor without expertise or qualifications.
Very few trained investment managers are financial advisors. Most are salespeople following management directions. That can mean advice and recommendations favoring the company over a client's best interests.
Even the contracts and documentation clients must sign protect the companies from fiduciary obligations but don't protect investors.
Investors need an advisor who works for them and has the investor's best interests in mind. The alternative, learning to manage your investments, requires time, knowledge, and effort.
See more details, discussion, and FAQs in this lesson: Media exposes advisor incompetence.
How do financial advisors get paid?
Financial advisors are paid a portion of sales or transaction commissions, a split of client account fees, and other fees. Those other fees are splits of a fund and financial service company payments made when their products or services are used. While investors also pay mutual and other fund fees, many funds also share those fees with advisors. And because they get a cut of mutual fund fees, many advisors recommend them over lower-cost ETFs that do not pay. As a result, mutual funds produce lower investment returns than comparable ETFs. That difference comes from investor pockets. Those and most fees are paid annually with good or bad results. And as always, any investment loss, any other cost, or risk is borne by the client. Fee-only advisors provide an alternative. See details, discussion, and FAQs in the lesson, Media exposes advisor incompetence.
How can brokers take client money?
Brokers seldom commit outright fraud or theft. But client money can get taken through increased costs without client benefit. Churning, inferior products, and mutual fund loading are more common.
"Churn to earn" is how inferior financial advisors generate commissions from unnecessary trades. The trades generate commissions but give clients little or no benefit.
Second, selling inferior products to clients as "suitable" when better ones are available does earn advisors' fees and commissions, but the client gets a subpar performance.
The third is the common practice of loading client accounts with high-commission mutual funds. Brokers and companies split high recurring fees when comparable ETFs can improve investor returns by up to 100%!
See details, discussion, and FAQs in the lesson, Media exposes advisor incompetence.
What are the signs of a bad financial advisor?
Trust your instincts when selecting a financial advisor. If you feel something is wrong, look elsewhere.
Avoid advisors who are not transparent about their fees or are unwilling to negotiate, as this is not in your best financial interest.
Effective communication means your advisor is available and responsive, and their explanations make sense to you. If not, consider other options.
While paying attention to negative rumors about an advisor is essential, verifying the information before making any decisions is equally important.
Never tolerate an advisor who intimidates, bullies, or disrespects you. If your advisor reacts negatively to your questions, find a new one.
Your money and future are at stake, so only settle for what feels suitable.
See details, discussion, and other FAQs in the lesson:
Media exposes advisor incompetence.
How do I deal with a financial advisor problem?
Think through the issue. Simply losing money on an investment is not grounds for a claim.
But if abused or wronged, you have options. First, try to resolve the issue with the advisor.
Document everything because you need a well-thought-through plan if the advisor does not resolve the issue. Write down your problem or complaint and record every contact and action you take.
Any misrepresentation of an investment can be a serious issue. As well, any unsuitable investment is a big issue. Contact the branch manager.
If that does not resolve the issue, file complaints with the company, the standards body of any professional organization, and the security commission.
Finally, you can hire an attorney and take legal action.
See details, discussion, and FAQs in the lesson, Media exposes advisor incompetence.
Should I talk to a financial advisor before investing?
If you need more time or knowledge, seek guidance from an advisor to invest well.
Before making a decision, interview both fee-only financial planners and advisors to ensure the advisor you choose has experience dealing with clients like you.
Choosing an advisor with the expertise to create a plan and investment strategy that matches your circumstances, tax situation, and goals produces the best outcome. The best advisors help clients become more knowledgeable and successful investors.
See details, discussion, and FAQs in this lesson: Media exposes advisor incompetence.
FAQ about financial and investment advisors from the lesson, Best stock scam tips.
Being aware, on watch and doing your homework provides investors with the best protection against stock scams. Use the best stock scam tips to keep investing safe, fun, exciting, interesting and profitable. The easy to follow tips help keep money in your pocket and working for you.
What are the best stock scam tips?
The top twelve tips to protect money from stock scams are,
1. Say no to high-pressure sales tactics.
2. Only invest in well-established markets.
3. Avoid the over-the-counter (OTC) market.
4. Research and understand before investing.
5. Verify sales rep and company registrations.
6. Hang up, cut off, or delete unsolicited contacts.
7. Learn about markets, investments, and investing.
8. Insist on audited financial statements for any investment.
9. Don't follow the herd or succumb to FOMO (Fear Of Missing Out).
10. Learn the difference between investing, trading, and speculation.
11. Manage emotions with the emotional intelligence of a wise investor.
12. Use an Investor Mind to think, feel, and act as a successful investor.
See more details, discussion and FAQs in this lesson, Best stock scam tips.
Are all stocks scams?
Stock market challenges confront all investors, but technically the market is not rigged. While stocks are not scams, there are scams in the stock market. So wise investors avoid scams by doing their homework before making any investment.
By doing thorough research, seasoned investors can avoid scams and identify the most promising opportunities amid the vast array of legitimate investments. That keeps investors informed and enjoying the profitable fun of investing. Any investor can educate themselves to become scam-aware and informed.
See more details, discussion and FAQs in this lesson, Best stock scam tips.
What is the best stock scam defense?
Informing yourself and thinking are your best stock scam defenses. Keep your investing rewarding and enjoyable by always doing your homework before investing.
And use these big six money-protecting defenses against stock scams,
1. Avoid stocks listed on the OTC Market.
2. Insist on audited financial statements.
3. Hang up or ignore unsolicited calls, emails, or investment requests.
4. Don't let greed or FOMO (fear of missing out) become a wealth danger.
5. Verify the registration of investments, sales reps, and companies.
6. Any urgent pressure to invest NOW is a red flag. Just say no!
See more details, discussion and FAQs in this lesson, Best stock scam tips.
How do I avoid stock scams?
To avoid stock scams, do what wise investors do,
Invest in yourself to become a knowledgeable, informed investor.
Research before making any investment decision.
Stay current with changes in the world, markets, and investments.
To make informed decisions and protect their interests, wise investors use research and investment analysis to safeguard themselves against scams and poor investments. They have a healthy dose of skepticism, seek multiple opinions, dedicate enough time for due diligence and always verify sellers' registrations.
See more details, discussion and FAQs in this lesson, Best stock scam tips.
How do I spot a stock scam?
It's a scam when the answer is YES to any of the following questions.
Does the seller make you feel obligated?
Do you feel FOMO or Fear Of Missing Out?
Are returns high or guaranteed at low risk?
Are you asked to pay to play or pay to win?
Must you buy now or miss a one-time opportunity?
Are calls and sales pressure persistent and repeated?
Are the contacts and investments a secret opportunity?
Is it too good to be true, a hot tip, or inside information?
Are gift cards, wire transfers, or cryptocurrency needed?
Is the offer unsolicited or from someone you do not know?
Verify the registration of both the company and the sales representative and only trust audited financial statements or credible research reports.
Any intuitive doubts are warning signs; say no and hang up!
See more details, discussion and FAQs in this lesson, Best stock scam tips.
Can a stockbroker steal your money?
Broker theft or fraud is rare, but clients can lose money from mutual fund loads, churning, or stuffed with new offerings.
Accounts loaded with mutual funds pay advisors higher recurring commissions and annual fees, which raise client costs. But comparable lower-cost ETFs are more beneficial investments with better returns.
Churn-to-earn means unnecessary trades produce advisor commissions but give clients limited or no net benefit, just higher costs.
Advisors and financial firms earn high fees selling new issues. Moving the inventory to client accounts takes advisor quotas, premium commissions, and management pressure, despite a record of poor net investor returns.
These are the most common schemes, although there are many others.
If you suspect account abuse, take action!
See more details, discussion and FAQs in this lesson, Best stock scam tips.
How do I check out a stockbroker?
Check out a stockbroker by listening to your intuition when considering the answers when you research these questions,
1. Are you comfortable in a get-to-know-you conversation?
2. When you Google or web search both the names of a stockbroker and their firm, are any concerns raised?
3. Does searching federal, state, or provincial regulators reveal issues?
4. Are they registered professional association members?
5. Do regular monthly reviews of your statements raise concerns?
If you are uncomfortable with the answers or any issues, move on.
See more details, discussion and FAQs in this lesson, Best stock scam tips.
What stockbroker misconduct is most common?
Most stockbroker misconduct puts their interest over the client, including,
1. Poor communications
2. Unsuitable investments
3. Misrepresenting or omitting facts
4. Churning - unnecessary trading to earn commissions
5. Mutual fund loading for high fees over lower-cost alternatives
6. New issue stuffing - earn fees but have poor returns
7. Unauthorized trading
8. Unauthorized profile changes
9. Ignoring instructions
10. Breach of promise
11. Misappropriation - theft, fraud, and forgery
12. Concentration - poor diversification
13. Margin abuse - fees on margin, not investment total
14. Not licensed or registered
15. Insider trading
16. Ponzi schemes
17. Pump and dump schemes
18. Selling unregistered securities
For any misconduct concerns, take immediate action!
See more details, discussion and FAQs in this lesson, Best stock scam tips.
In addition to, FAQ about financial and investment advisors, check out these lessons from the White Top Investor course:Investment Choices of Superior Investors, Lesson links:
Key investing success choices Lesson 290.01
Join exceptional wealth builders Lesson 290.02
Investing time or adviser time? Lesson 290.03
Small investors have advantages Lesson 290.04
4 Successful investor traits Lesson 290.05
Avoid 6 investing sins Lesson 290.06
Investment impatience destroys wealth Lesson 290.07
3 Yeses or no investment Lesson 290.08
Investing can be fun, interesting and slow Lesson 290.09
Warren Buffett explains gold Lesson 290.10
Comment or ask questions on:9 FAQ about financial and investment advisors
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