Monthly Archives: May 2011

Hiring Financial Advisors – 7 Mistakes

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Hiring Financial AdvisorsNone of us can afford to make a mistake when it comes to our personal finances. And yet many people will turn over all of their money, Sometimes to a complete stranger, under the guise that this person is a financial adviser. Hiring Financial Advisors should be done with care.

If you were planning to hire someone at work, would you hire the first person you talk to, hire them without talking to references or looking at their resume. Many people do this when they hire a financial adviser to manage their investments!  It happened to me and all the guy wanted to do was to buy and sell stocks for me. The worst part is that he could not even remember my last name! He did not last long.

Hiring Financial Advisors

What are the Mistakes that We All Make?

Here are seven common mistakes you can avoid when hiring a financial adviser.

  • Interviewing just one candidate
  • No background or reference check
  • Focusing the search on cost or payment style
  • Expecting credentials to make an adviser ‘good’
  • Expectations and results based entirely on returns
  • Letting the adviser control everything
  • Hiring friends and relatives

Let’s face it most people do ok because most advisers are honest and hard working. However, we have all heard of the terrible things that have happened to people that have lost everything because their advisers either made huge mistakes or defrauded them out of their life savings. If you avoid these most common mistakes, at least you have a better chance of avoiding losing everything.

Common Mistakes Made by Many People – 1: Interviewing just one candidate

You have decided that you need more than just a broker to help with your finances. You have questions about your investments and whether your savings will last into retirement. It is time to hire an adviser. Do you hire the first guy to come along or do you interview a number of people?

Do you buy the first house you see, the first car on the lot, and do you compare prices for items you buy? Why not compare the services from advisers? After this is your savings for you and your family for retirement. This is important, right?

Yet many people will hire the first person they talk to. Sometimes it is because a friend or a relative recommended them. Do you take the advice at face value or to do you do your own investigation? Sometimes word of mouth works great, but it still is the best advice to check several advisers out before you make a decision.

Common Mistakes Made by Many People – 2: No background or reference check

Fancy offices, nice cars, rich clients, and fancy clients do not mean success. After all, they could be living off your commissions or even your own money.

Check with references that you trust. Radio hosts who have advisers on their shows are looking to fill time on the radio not invest with the adviser. As long as they sound good they will have them on their show. This is not a reference check. Some of the time on the radio is even paid for by the advisers, so even though it sounds like investment advice, it is really just advertising.

Even after checking references etc, some may still get past you, however, the chances are much reduced and your investments will remain safe.

Common Mistakes Made by Many People -3: Focusing the search on cost or payment style

Everyone objects to paying fees for questionable advice. Most advisers collect fees by selling and buying investments on your behalf and therefore every recommendation must be suspect as a result.

Sometimes paying by the hour can be more beneficial and less costly, however, it really depends on the trading action and investment style you have.

The real answer is how much money you will make, “NET” and which approach will be more successful.

Common Mistakes Made by Many People –  4: Expecting credentials to make an adviser good

Professional credentials are easy to get for financial advisers. My adviser has a wall full and yet I don’t think I get any better advice from him than I did before he got all these diploma’s

Hire a person that you trust and not a credential; Even if you trust the person completely, never let go of the control of your investments. Money corrupts and after all, it is yours to lose not someone else’s.

Common Mistakes Made by Many People – 5: Expectations and results based entirely on returns

People hire advisers because they need help, they want to make money, and want to get their finances in order. They often fire advisers because they don’t earn a big enough” return.

For every person who gets rich quick, there are a thousand that lose their money. You want an adviser who is going to counsel you to ride over the bumps of the market. They should position you to have a nice nest egg by the time retirement comes around.

Long-term performance is what really allows them to ride the market roller coaster and retire comfortably.

Common Mistakes Made by Many People – 6: Letting the adviser control everything

It is your money and never relinquish control of your funds to someone else, especially your adviser. You have the most at stake, the most to lose so it only makes sense that you make the decisions!

Common Mistakes Made by Many People- 7: Hiring friends and relatives

It is hard enough to fire a person who works for you, i.e. your adviser, it is many more times difficult to fire someone who is a friend or a relative. If you have to fire that friend or relative, chances are they will no longer be a friend and your relative may not speak to you for a while.

Hire based on references, background checks, and performance.

 

 

 

Handing in My Resignation

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This is another post about changing jobs that were instigated by a phone call from a friend who was thinking about handing in his resignation and moving to another job. You can check out my previous posts – “Should I Change Jobs” and “Leaving a Job, Talk to an Adviser” which cover those topics and some of the things you should consider before making the decision to change jobs.

Handing in My Resignation – Do Not Burn Bridges

This post is focused on handing in your resignation, once you have done your homework and have made the decision to leave your current job. There are many ways to resign, however, the bottom line is that you never want to burn any bridges. In my experience, I have found that over the years you work with many people in many different companies and functions. Over the years you work with these same people many times even if you change jobs. You never know when good contact, a friend or a colleague can help you with a project, or the next job.

Handing in My Resignation – Be Professional

Always be professional, especially when you are handing in your resignation. Wait until you have a firm offer from the new company and then turn in your resignation to your boss. The personal touch is always best. By that, we mean to set up a meeting and do it in person or over the phone if they are in another city. Then provide the written signed letter of resignation. Keep your letter short and to the point and provide a final date, which will indicate your last day.

You should also extol the virtue of the company, the colleagues, and your experience and learning at your old company. Never say anything negative in your letter or even verbally. This is all part of networking, not burning bridges, and keeping your relationship professional!

How Much Notice Do I Need to Provide

The amount of notice varies a lot depending on the local laws, the company, how you feel about the company, even the level you are at within the company. If you are trying to maintain excellent relationships, giving a longer notice so they can find someone to replace you and you can transition to may put you in good standing over the longer term. Some people will bounce back and forth between companies a lot. Keeping a professional flavor to the relationship is always the best approach.

Some companies are very concerned about security and this really depends on company policy as well as the type of job you have. Some companies will accept resignations and walk you to the door because they are so concerned about security issues, while others will take advantage of the last few weeks to learn as much as possible from you. Whichever occurs don’t take it personally, it is just business and company attitudes about the security of information.

Being Nervous, Feeling Like You Are Letting the Team Down

Many people have a professional and nonprofessional relationship with their teammates at a company. If you are working on a project you may feel that you are letting the team down by leaving. You may even feel that you are letting the company down if they have treated you well over the years.

Sure some people will be disappointed that you are leaving and will be sorry to see you leave. Your boss may even be upset. Not because it is you that is leaving, but because he or she now has to replace you and find someone to fill in for you.

Members of your team, even your boss will be happy for you especially if you are leaving for a better situation. Whether it is better pay, less stress, more benefits or even a more interesting job, they will be happy for you. They might even be a bit envious and some will want to stay in touch so that they too can follow you, especially if they can improve their financial situation.

So bottom line, don’t be nervous and don’t feel guilty about handing in your resignation.

Say Nice Things

Before you leave as well as after you leave, always say nice things about the people and the company. No one wants to listen to a negative tirade about how bad it was at some other company. You never know when it might come back and cause you problems in future jobs, future sales, or future relationships.

If a job, company, or colleague is really not that great, then do not say anything at all. People will still get the message, and you will not be blamed as being negative or worse sued for libel.

There are some situations that are just not tolerable and this situation forces you to leave. If it is illegal, then you really should do something about it. Regardless you want to get as far away as fast as possible from this situation. Avoid being caught up in something that is really not good for your career and/or even freedom.

Feel free to leave comments and suggestions about this post, handing in resignations, changing jobs, etc. Our readers will benefit from constructive helpful comments.