Armchair Millionaire Community Bulletin: The Financial Advisors to Avoid

Not all financial advisors are created equal. Be certain that you have the right person on your side--someone genuinely looking out for your best interests--before you commit to working with any advisor.

New York, NY (PRWEB) August 3, 2004 -- A good financial advisor can be a tremendous ally in achieving financial independence. But with tens of thousands of advisors out there (and more every year), it can be easy to choose one who does not meet your needs.

When we asked Armchair Millionaire community members what they look for in a financial advisor, we found that many people understand the importance of finding just the right match. Here are two comments we heard:

"I looked for an advisor who would do more than hear me, but listen to me. I wanted someone who understood my higher risk attitude, but who I felt I could trust to challenge my ideas as well." --Kenneth

"You should know what you want and where you want to go. You need to communicate these values with whom ever you choose. The most important qualities would be for your advisor to listen and understand your goals and risk level." --Alan and Kay

To avoid linking up with an advisor who is not suited to helping you achieve your long-term financial goals, it's important to know the red flags that signal trouble. My guide tells all.

The Armchair Millionaire's Guide to the Financial Advisors to Avoid

"I get paid every time you buy or sell." Advisors who work on commissions may be more likely to recommend frequent transactions in your portfolio, which has never been proven to increase investment returns. Your advisor should be compensated primarily through a fee structure you agree on in advance, and not by brokerage commissions.

"I can beat the market." As appealing as it may sound, the reality is that the possibility of any single money manager consistently outperforming the market over time is virtually nil. You don't want an advisor who chases returns; you need one who will help keep you on a sensible path for the long term.

"Let me do the thinking." One of the things you should expect from any good advisor is education about the best ways to achieve your financial goals. Steer clear of any advisor who is unwilling (or unable) to clearly explain their approach and solicit your feedback.

"I've got a no-fail, risk-free system." There are no gimmicks or secrets to wise financial management, and you should avoid any advisor who claims there are. In particular, watch out for advisors who fail to take your risk tolerance into account, or who tell you that they can provide investments that carry no risk--there simply is no such thing.

"I can take care of all of your financial needs." Don't assume that a financial planner is an expert in insurance, or that an attorney in an expert in taxes, or that a CPA is an expert in money management. No single advisor can provide the expertise you may need in every area, and should not claim to. Instead, your advisor should be able to refer you to the right expert as needed.

THE BOTTOM LINE: Not all financial advisors are created equal. Be certain that you have the right person on your side--someone genuinely looking out for your best interests--before you commit to working with any advisor.

THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Is it better to buy a new or used car? Log on to www.armchairmillionaire.com and let us know.

Lewis Schiff is a contributor to CNNfnMoney.com, the Web sites for CNN and Money Magazine. His newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

CONTACT INFORMATION:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com

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