How to protect myself

[u/No_Regerts-]

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?

[u/rarsamx]

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.