Never give up control of your finances.
For some, it’s hard to admit they need help with their finances. For others, they are happy to delegate this responsibility. No matter how you feel about your finances, it’s critical to retain control.
If you turn over control, you risk losing everything.
You are Responsible
You can seek advice from friends and family, hire professionals to assist you or even take stock tips from cab drivers, but you need to be the primary decision maker. Your future depends on the money you save and it’s far too important to trust to anyone but yourself. Even if you’re not a financial genius, you must step up to this responsibility.
Keep accounts in your name and review them regularly.
Protect Your Assets
There is a lot of publicity surrounding the recent fraud by Bernard Madoff and Robert Stanford. But, this happens in America all of the time, on a much smaller scale. Financial planners and investment advisers are sometimes incompetent or dishonest, with a devastating effect on people’s assets.
Financial professionals are often very well respected within a community. This gives them a lot of flexibility and places them above suspicion. Often, by the time fraud has been discovered, it has been going on for years. There are rarely any assets to recover and investors lose everything.
Don’t let your investments disappear with your adviser.
Avoid the Conflict
I have posted many times that there is a conflict of interest in the financial services industry. The way advisers are compensated by commissions often gives them incentive to act in the best interests of investment providers or their employer. Whenever they act in your best interest, they may leave some commissions on the table. It’s best to avoid this conflict entirely.
When advice and commissions mix, you pay dearly for both.
Get Good Advice
You may think from reading this post that I am against financial advisers. That’s not the case at all. I believe people should always try to get the best advice available to them. If you need financial advice, consider hiring a fee-based planner and pay for this valuable service. If your planner provides good financial advice, the benefits should far outweigh the costs.
Paying for financial advice may be a very wise investment.
The Bottom Line
The bottom line is that it’s easy to become a victim of the financial services industry. The more you know about the industry and the more you make your own decisions, the less likely this will happen to you.
“The first and worst of all frauds is to cheat oneself.”
Philip James Bailey – English Poet
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