As consumers we face a multitude of ways we can purchase products and services. Buying shampoo? Easy. What about your last car purchase? A little more complicated, right? You probably talked to some friends, took a test drive and of course looked to see what the web had to say. Most of us feel anxious due to complicated pricing schemes and the likely back-and-forth price negotiation. This all leads us to wonder if we got a good deal.
We are aware that some consumers have similar experiences within the financial services industry. They may feel they were led through a lengthy, confusing process and/or that they bought investment products with costs that were unclear (or not fully disclosed). Bottom line, they had an undesirable experience.
There are many different ways the industry charges fees, so as a result consumers have a very difficult time comparing “brands” doing their own cost/benefit analysis, as an apples-to-apples comparison is often a challenge. But what we find most disconcerting is that some “professionals” in the industry do not fully divulge their compensation. As a result, consumers are often distrustful.
We blame the industry. Unless an advisor holds their client’s interests out to be of greatest importance (this is called a fiduciary responsibility) the client is at risk. There is a debate taking place in Washington, D.C. on this topic right now, and we believe the conclusion is quite simple. An advisor should always serve their client’s interests first. It really is that simple.
In addition, an honest and forthright financial advisor should always serve their clients with total transparency. They should disclose all costs a client may incur along with any potential conflicts of interest prior to entering into a professional relationship. You deserve total transparency in each and every advisory relationship you have.
If you don’t know what fees or commissions you are paying, just ask. A reputable institution or advisor should be happy to provide you a prompt, clear, and complete explanation, including all the internal expenses for mutual funds and other investments. You deserve full transparency when it comes to how much you pay for the products and advice you receive from an advisor. It is the only way you’ll ever know if you are receiving a good value, so that you’ll choose to maintain a trusting, long term relationship.