In discussions with business acquaintances and my own personal experience; I have noticed that most clients are so fickle and they would rather see 4.5% of their investment go toward fees, even if it accumulates to tens of thousands of dollars, than pay $5,000 upfront for the actual advice. That said, a study by the Financial Planning Association revealed that even those that opted for commission based fees, were still better off than those who never speak to an advisor.
Many people pinch pennies when it comes to what they pay for financial services be it accountants, tax agents, financial planners, brokers and everyone else.
Now I am not telling you not to shop around, in fact some of the best business people I know interview several firms and ask very in depth questions before settling on one. Keep in mind though, fees should not be your number one concern; quality, service, rapport and outcomes are infinitely more important.
Financial services is one expense where you should not be cutting corners. The cost of going to Dodgy Bob’s Discount Financial Services may be much more in the long run, even if he is 80% cheaper than everyone else. Think about it, isn’t there a reason he’s charging 80% less? The cost could be in money lost on bad investments, a tax audit or the extra fees you need to pay a real professional to clean up the mess. Think about it, finance professionals have a high motivation to help you make more money. Why? Because the more money you make, or the more your business grows the more they get to charge you. you should be happy you’re being charged more, because it means you’re making more money! See everyone wins.
What’s worse than Dodgy Bob’s is taking free advice from friends, colleagues and family. If they’re not getting paid, they have no real incentive to give you good quality advice. More often than not they don’t expect you to take any action on their advice, they are merely shooting the breeze and regurgitating what they heard in the latest current affairs program. What’s worse, is if they are not a finance professional, then they have absolutely no qualification for that advice what so ever. Be cautious of friends that approach you with a sure thing; be even more cautious if they seem persistent.
In conclusion, not only should you make the best endeavors in becoming a master of your own personal financial literacy. You should also know when to delegate the hard stuff to a financial professional and pay fee for advice only.
Chris Hooper
(Shut Up and Save)