Economics

Dubious financial advisor

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Have you ever experienced it? Usually, on the phone, a friendly voice answers: “We are currently surveying the subject of saving taxes. This will certainly be of interest to you too because you must also believe that you are paying far too much tax. We have there an interesting offer and would like to make an appointment … “

Anyone who accepts this does not invite a survey institute to come to their home, but rather experts in sales of financial products.

What is a “Financial Advisor”?

The term “financial advisor”, sometimes garnished with the addition “independent”, is sonorous. It promises what many are lacking: sound advice on financial matters that is geared solely to the well-being of the customer. Quite often, however, only hot air comes out, according to the motto: What is sold is what brings the highest commission. Anyone who thinks that a “financial advisor”, “asset optimizer” or “money expert” always has a bright head is making a big mistake.

How does a dubious financial advisor establish contact?

The first contact is often made without prior notice over the phone or at the front door. Unsolicited offers by email are also becoming increasingly popular. Contacting us without prior consent is prohibited by law. However, since disregard of the prohibition is rarely prosecuted, dubious financial advisors are not put off by it. Serious providers do without unsolicited phone calls. You only call them if there are already contractual relationships.

Checklist: How do you recognize dubious financial advisors?

The initial telephone contact takes place without a request from the customer.

  • Terms such as “optimize old-age provision”, “save taxes” or “risk-free” are used as “decoy”.
  • Customer questions are often answered with counter questions, and moral pressure is applied (“Do I look like I’m lying?”).
  • The “friendship scam” is supposed to create trust, something like this: “Your work colleague/sports comrade recommended that I ask you whether you also want to save a lot of money every month.”
  • High returns without risk are promised. But: the higher the return, the greater the risk!
  • Only verbal promises are made about the security, return and duration of the offers. Attention: If these promises are not fulfilled, there are problems of proof. Therefore always make promises in writing!
  • Existing investments are poorly made, and you are asked to terminate them.
  • The considerable costs of sales, preparation of prospectuses, administration and brokering of bank loans are kept secret.

CAUTION: NEVER LET GO OF IT. IT’S ALL IN THE PROSPECTUS.

There is pressure to sign contracts quickly. But: investment products are a dime a dozen. There is no rush! A sales prospectus is only handed over after the contract has been signed – often after the withdrawal period has expired.

How does the financial advisor make his money?

At the expense of the customer! Most “financial advisors” work as independent sales agents on a commission basis. The more and the more expensive products are sold, the brighter the cash register rings.

Whether the product fits the customer is not decisive. It is not uncommon for the conversation to be directed towards a single offer anyway. The focus for the “consultant” is the quick conclusion of a contract because time is money.

Are there reputable financial advisers?

Yes, typical features are that you give the customer enough time to study the documents relating to an investment carefully and recommend that you obtain a second opinion, for example from a consumer advice centre or a tax advisor; they have no problem with confirming and delivering the essential facts in writing; they expressly state that the contract can be revoked within 14 days if there are doubts about the decision after the conclusion of the contract. Never enter into contracts with financial advisors who want to get in touch and talk about monetary matters without prior agreement; come up with the “friendship scam” and press for a hasty conclusion; promise high returns without risk and an exit option at any time; only make verbal commitments.

THE BEST PROTECTION AGAINST SUCH FINANCIAL SHARKS: HANG UP THE PHONE!

Hello, I have been working as an investment consultant and author for more than 20 years. I love what I do and I have enriched everyone around me. A lot of money is not important, the main thing is how you use the money.

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