Are You Working With a Financial Advisor or a Salesperson?

     When is a “financial advisor” really an advisor and when is he just a salesperson? The answer to that question has important implications for millions of Americans who turn to financial professionals to help them navigate often complex decisions regarding how best to invest for long-term goals, including retirement. After all, people expect salespeople to look out for their own interests and maximize profits, but advisors are expected to meet a higher standard. They are expected to put their clients’ interests first, a requirement that is known as a fiduciary duty.

     It turns out, however, that how certain “financial advisors” answer that question varies greatly depending on the context. These are the transaction-based financial professionals typically employed by broker-dealers and insurance companies. When they are marketing their services to the investing public and enticing clients into handing over their hard-earned savings, these sales-based financial professionals present themselves as “trusted advisors” whose only concern is their clients’ best interest. But try to hold them legally accountable for meeting that standard, and those same “advisors” quickly change their tune. Because they are salespeople who are “merely selling” investment products, they claim, no fiduciary standard ought to apply.

     Investors who unknowingly rely on biased salespeople as if they were trusted advisors can suffer real financial harm as a result. It is estimated, for example, that retirement savers lose $17 billion a year or more as the result of the excess costs associated just with conflicted retirement advice. The cost on an individual basis, in the form of lost retirement savings, can amount to tens or even hundreds of thousands of dollars over a lifetime of investing, money that retirees struggling to make ends meet can ill afford to do without. In addition to paying higher costs, investors who rely on biased sales recommendations as if it were unbiased advice can end up facing unnecessary risks or receiving substandard returns as a result of incentives that pervade the compensation system for sales-based advisors. Cumulatively, these industry practices drain tens of billions of dollars every year out of retirement savers’ pockets and into the pockets of financial institutions and their financial professionals.

     Your trusted CERTIFIED FINANCIAL PLANNER™ Professionals at Robert Gordon & Associates have operated under a "Fee-Only" business model since the founding of the firm. We have never sold product and therefore have never accepted, or made recommendations based on, the commissions that can rob the hard earned savings of Americans.  

CALL TODAY to learn more about the difference between a true advisor and a salesperson!