Thursday, January 16, 2014

How to identify bad financial advice

Some people loss some money after follow the financial advice from other people. They must got the bad advice from them. They cannot distingusih whether the advice is good or bad. The client who has lost money cannot claim the bad advice to the financial planner. We know that they just give us advice but the financial decision is still in our hand. We are free to put our money to any investment.
Therefore, we have to know whether the financial advice is good or bad. We can identify by doing these:
1. Is the personal qualified?
Some financial planner has doctor degree but they may not have experienced in finance or investing. They have no expereience in personal finance advice.  You should know whether they have experience. The financial planner should have certified financial planner or CFP or they have pass the CFP exam.
2. Is the person has interest with some company?
Some bad people suggest you to buy specific stock. They persuade that the stock will double or triple next month. Surely, you are tempted with the word.
Some people will get money or marketing fee when they can ask people to buy specific stock. They can get the percentage of the stock. If they can attract more people to buy the stock, they can get more money.
3. The opinion from other people
Ask the people who is also the client of the planner. Is the planner bad? Are the client not satisfied with them? You can also ask the friend or people near you.  How much people say satisfied and how much people say unsatisfied? Make sure the advice has a good track record.
4. Do you understand the advice
The ambiguity advice must be a bad advice. The man who advice should give the clear explanation about the advice. They can answer any question that you ask. If they can answer your question well, you should be careful with the advice. They may not know about the advice. They may have bad motives.
5. Feel Good
Are you feel good with the advice? Some people have high institution. They can feel bad when they get the advice. If you are doubt, you may leave the advice. Do not follow the advice when you are in a doubt.
6. The advice come from questionable source
The people who give the advice does not know where he get the advice. Sometimes they quote unknown or questionable source.

No comments:

Post a Comment