It’s the old adage – would you see a doctor who smokes, or maybe a dentist with rotten teeth?
Hardly seems like they’re taking their own advice, does it?
So in the same respect, what would you think if your financial advisor was advising you to invest your money one way, while they chose to invest in a completely different fashion?
Sure, you wouldn’t expect a financial advisor to maintain the exact same portfolio structure as your own, as each client needs their assets allocated according to their age, lifestyle goals and risk profile.
Yet if they weren’t invested in similar ways, using a similar strategy according to their age, lifestyle goals and risk profile, questions should be asked.
In some cases, even if you’re invested the same way as your planner, it’s no indication you’re on the right path, it just means you’re going off the cliff with them.
You may have heard of the North Queensland investment firm, Storm Financial. The Storm owners pushed a debt fuelled investment strategy, flaunted opulent offices, lived in huge mansions and flew in private jets.
A very seductive vision for investors, and while markets moved up it was a fantastic strategy, because the gains were magnified.
And when the markets moved down, the losses were magnified. Storm Financial was wiped out and so were many of their clients, to the extent some clients lost all their capital and owed money after the collapse.
An advisor should be able to display a tried and true methodology and the Storm process was never sustainable, no matter who was putting it into practice.
Meeting a financial advisor shouldn’t just be a one way conversation where the client answers all the questions.
You should have some of your own – how are their methods proven and importantly, do they practice what they preach?
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you’d like help with your financial future, we might be Australia’s best financial planner. We think we’re Tasmania’s best financial adviser and
