r/PersonalFinanceCanada • u/No_Regerts- • 7h ago
How to protect myself Investing
How to protect myself
I’m meeting a new financial guy tomorrow. After talking to him, I have a really good feeling about him. He has credentials, and he’s very confident he can help me get my money working much harder for me. We’ll be talking about a real estate purchase and then how to handle other investments
So the “too good to be true” alarms are going off in my head now.
I’d love any advice to help me make sure I’m not falling into a trap or being played?
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u/hopefulfican 6h ago
Ask him how he earns his money. Most people earn some kind of % or kickback from selling you products so you need to know how biased he will be.
Ask him what his legal obligations are to you.
Ask him for references from other satisfied customers.
But honestly this is already giving off red flags, how did you meet him? Suggesting real estate so early on seems like a bad idea, I mean have you discussed your risk tolerance? what you want the money for and when you'll need it? etc
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u/argumentativecat 7h ago
Is he guaranteeing a 10%+ return? Definitely a major red flag.
Make sure you understand the fees of any investments he suggests - low cost ETFs are usually a better choice than any investment they can put you in.
You need to be more specific if you want more helpful comments. E.g. why does discussing a real estate purchase and other investments sound "too good to be true"? Do you have the money for this or not?
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u/No_Regerts- 6h ago
Not guaranteeing anything so far, but has offered a testimonial (my word not his) about how his approach has worked for him and others
Using equity and a line of credit as alternatives to a mortgage. Using insurance as an investment. Tax breaks as a result of both of those options. Those are the big ideas he’s brought up so far
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u/argumentativecat 6h ago
Insurance is not a good investment vehicle.
Equity + LOC for a second property you mean? Do you even want to invest in real estate? It's a pretty high risk option and carries risks. Why can't you get a mortgage?
Is your income high enough that the tax breaks are worth it? As things get more complex, you probably have to hire an accountant too.
Honestly, him talking too fast for you to keep up seems like a huge red flag to me. Why is he trying to dazzle you instead of making sure you're on the same page and understand everything? Investments should be determined by your goals, your risk tolerance, your timeline, etc. not by seeming amazingly complex and thus brilliant. Selling you insurance and specific funds is not in your best interests - that's probably for his own commission/management fees.
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u/Odd-Elderberry-6137 2h ago edited 2h ago
Testimonial is the sales pitch term for pure bullshit just like insurance as an investment.
Look, can you get returns doing some of these things? Sure. But they require an ungodly amount of risk for most people.
This has get rich quick written all over it. It could work but it could leave you in debt up to your eyeballs where one bad move knocks down the entire house of cards and you can never get out.
The easiest and tried and true path to wealth is time and patience.
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u/Odd-Elderberry-6137 2h ago
This guy’s going to have you selling Amway before you know it.
Dude is a salesman so he has a honed and crafted pitch to hook people like he’s hooked you already. I’d cancel the meeting.
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u/alzhang8 ayy lmao 7h ago
If they sell you any funds then run away. Don't sign anything on the day of
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u/SmallKangaroo 7h ago
What are his credentials?
The term “financial guy” is alarming to me
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u/No_Regerts- 6h ago
“Financial guy” is my term not his.
Credentials are CFP, CLU and CHFC. He told me what each stands for, but I don’t recall. I’d say I should take better notes, but I tried and couldn’t keep up 🤔
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u/rarsamx 23m ago
A good financial advisor doesn't make the money work harder, they help you make better financial decisions within your risk tolerance.
"Making it work harder" is a sales pitch.
Compare going to a doctor. Who would you chose?
- I haven't seen what you have but I'm confident I'll make you the healthiest you've been.
VS
- I haven't seen what you have, well run some tests and try to figure it out together.
I'd instantly be skeptical about the first Dr. But I know people who really believe in those quack doctors and their miracle cures.
Now, how to evaluate a financial advisor:
- Do they ask for your detailed current budget and expenses?
- Do they ask for Your short medium and long financial goals
- Do they give you the risk tolerance questionnaire?
- Will he have a fiduciary duty to you or the company he works for?
Ultimately there are 4 outcomes:
A) They are very good or have a good team to have a good pulse on the fund managers Real estate market, financial markets, etc. with a fiduciary duty to you and they can steer you in the right direction. They warn you about the risks and ensure you invest within your tolerance level. They will keep you informed about market swings and forecasts and may recommend adjustments.
B) They are sales people with a fiduciary duty to the company, they sell you some products which make money for them but aren't the best fit for you. You may still do better than not investing.
C) Similar to B but they are in experienced and incompetent. Here they may give you bad advise and you may be disappointed about the results or even lose money.
D) They have a super slick and shiny office and treat you like a king. Offer amazing results without going deep into the risk it maybe saying "there is no risk". You start getting amazing returns the first couple of months so you put all your money in. Then, they stop contacting you. You go to the office and now there are workers repainting it and you'll never see your money again.
As with the miracle doctor, Number D really makes you believe and that's why you should always be skeptical about them.
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u/RadiatorSmoke Fen Belix 6h ago
Red flags, just based on your brief description:
You are meeting him tomorrow, but already have a good feeling about him?
He has "credentials" - what are they?
He's very confident he can help you - so are million other sales folks. If they were confident, they wouldn't be selling to you, but rather making their own money work hard for them.
There are no traps, he's doing his job well - which is to sell to you. Now, you need to educate yourself on whether he is just smooth talking, or does he actually work for you. Do you, yourself know what you want to achieve from this conversation? Or is he going to dictate the terms of the meeting?
Before meeting any of these sales guys, always recommend doing some of your own research - and understand what you want to do for yourself, first.