What Your Financial Advisor Isn't Telling You PDF Free Download

5 Shocking Things Your Financial Advisor Isn’t Telling You (But We Will!) September 12th, 2017 Ross Stryker You know – the majority of financial advisors are decent people – but let’s face it – they are selling a product and they try to pigeon hole every investor into basically the same product class. Read an Excerpt. Keep Your Money Where You Make Your Money. The biggest secret that the financial services industry doesn't want you to know is that your employer is almost always your best financial services provider. Whether you love or hate your job, even the best financial advisor can't compete with the benefits provided by your company.

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Our CEO, Liz Davidson, recently wrote a book called What Your Financial Advisor Isn’t Telling You that details many of the essential financial truths that financial advisors generally neglect to tell their clients. The main reason is that advisors are generally compensated by either selling financial products or by managing assets. Sometimes this can present a conflict of interest for an advisor when a client is better off doing something other than investing through the advisor. Other times, advisors are simply unaware of options that don’t involve their products or services. After all, advisors need to focus their time on selling and gathering assets in order to make money.

This reminds me of my own previous life as a financial advisor. My first job was for an investment brokerage that was sued for providing incentives to brokers to sell mutual funds from seven “preferred” fund companies that were kicking back fees to the brokerage firm. I then went to an independent brokerage firm, then to a fee-based role, and finally a fee-only investment advisory firm.

What Your Financial Advisor Isn' T Telling You Pdf Free Download Pc

At each step in my career, I gravitated further and further from conflicts of interest. However, in each position, I continued to find that clients were not getting the full picture. This led me to leave the financial advisory profession altogether and become a full-time financial wellness educator at Financial Finesse. In retrospect, here are five of the main things my former clients didn’t know but should have:

1) My main qualification for my first investment job out of college was selling knives. I was an economics major but never took a single class in anything involving practical finance. Instead, I was hired because of my success in a summer job selling knives in people’s homes. This was pretty typical of the other new brokers I met, many of whom came from sales backgrounds completely unrelated to finance.

You might think that perhaps the brokerage firm taught us what we needed to know about financial planning, but the training was centered around sales tactics with just enough insurance and investment knowledge to avoid breaking the law. There was very little information about tax strategies, employee benefits, or other financial topics unrelated to selling the firm’s products. I had to learn all of that on my own.

If you’re going to hire a financial planner, it helps to look for one who at least has the Certified Financial Planner™ designation. CFP® certificants must earn a bachelor’s degree, complete college-level courses in financial planning, pass a rigorous exam, have 3 years or more of professional experience, and fulfill ongoing ethics and continuing education requirements. Financial Finesse actually requires it for all our planner applicants.

2) I was only paid to sell certain products or gather assets. If I didn’t recommend that clients invest in our products or use our services, I didn’t eat. However, that didn’t stop me from advising clients to build up an emergency fund, pay off high-interest debt, and max out their employer’s retirement accounts before investing with me. (I can’t say that was true for all advisors though.)

The one exception was IRA rollovers, which are the bread-and-butter for many advisors. This is despite the fact that there are many reasons why you might be better off rolling your previous employer’s retirement plan into your current one or even leaving it where it is rather than rolling it into an IRA. Similarly, I neglected to tell clients about other alternatives to my firm’s products like direct-sold insurance policies, no-load mutual funds, US government savings bonds, prepaid college plans, and investing directly in a real estate property or business. I also rarely if ever discussed strategies to improve and protect my clients’ credit scores, deal with student loans, mortgages and other debts, buy a home, get their estate planning documents in order, or address a host of other important financial decisions that didn’t involve selling investment or insurance products.

To avoid these problems, see if your employer offers an unbiased financial wellness program or look for advisors who charge fixed fees that are independent of what you decide to do with your money. These advisors aren’t limited to recommending the products or services of a particular firm and are more likely to provide more comprehensive advice. You can find advisors who charge annual, monthly, and hourly fees at the Alliance of Comprehensive Planners, the XY Planning Network, and the Garrett Planning Network, respectively.

3) I couldn’t reliably beat the market. That may be a surprising admission since advisors and brokers typically claim they can pick investments that can outperform the market. Sure there are times when the investments outperform, but in the long run, these active strategies overwhelmingly tend to actually underperform the market due to their fees and trading costs.

Advisors generally use this underperformance as an opportunity to demonstrate their value by reviewing their clients’ portfolios and replacing the underperforming funds with other funds that performed better. This helps justify their fees by showing that they’re “doing something.” (Nevermind that funds that outperform are unlikely to continue outperforming.)

Rather than trying to chase past performance, most investment experts say you’re much likely better off simply sticking to a diversified portfolio of low cost funds. Your employer’s retirement plan may offer a program like Financial Engines or Guided Choice that can help you put one together. You can also get a customized portfolio of low cost index funds outside your employer’s plan for free from certain “robo-advisors” like Wisebanyan, Future Advisor (there’s no charge for recommendations but you have to pay an asset management fee if you want them to make the trades for you) and Charles Schwab’s Intelligent Portfolios (the money has to be at Schwab and they use a lot of their own index funds). If you prefer to work with a human advisor, ask them what they charge and if they recommend index funds or more expensive actively managed funds.

4) I didn’t help the people who needed it the most. We were so busy pitching high-priced investments to people who could afford them that there was little time to help those who couldn’t. That left the majority of people who needed help saving money and accumulating something to invest with nowhere to go. As they say, it ain’t social work

If you’re struggling with budgeting or debt, there are some options. Your employer might have an EAP or financial wellness provider that can provide some guidance and resources to help you pay it off faster. If you’re having trouble making even the minimum payments on your debt, you may want to work with a nonprofit credit counseling agency.

5) I may even have enabled clients to hurt themselves. This isn’t to say that brokers and advisors don’t have any value. Some of the most valuable things I did were to encourage people to invest in the first place, prevent them from hurting themselves by taking too much risk (investing everything in dot com stocks at the height of the technology bubble) or not enough (leaving everything in a savings or money market account), and help them stick with their investment plan through thick and thin rather than making the common mistake of becoming more aggressive when the stock market was doing well and then bailing out of stocks during the eventual downturn.

That being said, there were too many times when I gave in to a client’s request out of fear of losing their business altogether. Some advisors even take advantage of people’s emotions by selling aggressive investments in good times and conservative ones when things are rough. A good advisor should be able to say “no” and act as a check on your emotions, not an enabler of them.

My point isn’t that I was a particularly bad advisor. I tried to do the best I could for my clients within an imperfect system. That system is beginning to change for the better, but in the meantime, it’s important for you to know what your advisor isn’t telling you.

Check out my website.

People have various opinions about Financial Advisors. Some respect them and would entrust them with their life savings, while others despise them and will never answer a phone call from one.

Think twice whether this really is a job you want to have. Many studies proved that, regardless of their education and certification, financial advisors did not really help their clients to save more money as they would save without their help.

In rather interesting research studies monkeys were throwing darts on a target at random (hitting either “buy” or “sell”, or in another case hitting a name of stock which brokers should buy). Interestingly enough, 98 out of 100 monkeys beat the US stock market… And they actually did better than many professional financial advisors!

Nonetheless, this isn’t a bad career, you can earn a lot of money as an advisor, and you will typically spend a lot of time in meetings (which is something many people like to do).

If you decide to pursue this career with a brokerage firm, investment bank, or any other financial institution, you will have to pass an interview. Let’s have a look at the questions they will ask you, and how you should answer them.

Why do you want to work as a financial advisor?

Do neither get carried away, nor show unrealistic expectations of the job. Saying that you want to be a Financial Advisor because you like to help people would be (nearly) like saying that you want to work as a butcher because you like animals…

Say rather that you love to work with money, have strong sales skills, and enjoy meeting all kinds of people. You can also say that you believe to have good knowledge of different investment products (especially if you went through a training program or certification), and will be able to give good advice to your clients.

Why do you want to work for our bank (company)?

Try to praise them for something. Perhaps their attitude to customers, the protection and guarantees they offer to clients, the wide portfolio of investment options, top-notch training program for new hires, or anything else.

Researching about the company you should find something positive about the way they do their job, something worthy of praise.

In fact most reviews and ratings you will find (of any financial institution) will be negative. But this is because a few satisfied clients would come back to leave a positive review, while nearly everyone dissatisfied would leave a negative one… Do not get discouraged by the reviews you find online–they never tell the entire truth, doesn’t matter whether positive or negative prevail.

Try to sell me this pen (notepad, mobile phone, etc).

At the end of the day, a financial advisor must be a good salesman, before they can become successful in their job.

Nobody will entrust you with $10, let alone with $100 or $1,000 each month, unless you can convince them that it makes sense, unless you can sell them the idea to invest their savings into something.

Therefor you can expect at least one role play in an interview. Now, the key isn’t to give them a perfect sales pitch–nobody expect it from you, and it is not easy to make such a pitch about an ordinary pen or a mobile phone!

The key is to show courage, to try the role play (if you refuse to do it they almost certainly won’t hire you), to ask questions, to try to find out what they are looking for in a perfect pen (notepad, investment, etc), and to lead a discussion with them.

Non-verbal communication is equally important in this case. Try to keep an eye contact, and speak with enthusiasm.

Remember that if someone doesn’t feel your enthusiasm about the thing you try to sell them (whatever it might be), they won’t buy it from you.

Role play isn’t as difficult as it sounds. Enjoy the moment, show courage, and try your best!

Special Tip no. 1: Download the full list of questions in a one page long PDF, and practice your interview answers anytime later:

Why do you want to work with our target group? (What group of people do you want to work with? )

The best answer is probably that you know how to sell to that group, that they feel good around you, that they trust you.

But you can also say that you have experience with financial products intended for the particular demographic group, and want to specialize further in the field.

If the question is different (you should choose the group), the situation gets trickier. Unless you know the profile of their typical customer, you should say that you have no special preference, and are looking forward to work with any customer/prospect.

How do you feel about making a cold call?

Financial Advisory is about relationships. But each relationship starts with the first contact, and in a case of this job it will often be a phone call.

I am 100% sure that you got such a call at least once (I get a call, from any kind of financial advisor or broker, at least twice a month, sometimes from people I never heard of working for strange foreign companies), and you probably rejected the offer.

Or you hung up, without even talking to them for one second. I sometimes do the same, but other times I find it funny and talk a bit with the advisor–before refusing their offer.

And exactly this will happen in your new job :). People will hang up, they will reject. At least most of them. Ninety percent, maybe ninety-five, or even ninety-nine… Can you handle that?

The key is to show the interviewers that you are not afraid of rejection, that you know that each NO you hear from someone brings you closer to a coveted YES, which will always eventually come.


You can even say that cold calls form important part of the job, and you understand their value, and know you have to make them to eventually become a successful Financial Advisor.

Do you prefer to earn your money through fees, or a fixed salary?

In reality, you will typically experience the combination of the two. You will have a plateau, a fixed salary (not a particularly high one), and you will earn extra money on fees.

But read the job description carefully since some institutions (especially brokerage firms) may pay you only on a fee basis (you close no deals, you get no money…)

Anyway, to demonstrate that you are confident of your sales skills, you should say that for sure you want at least part of your compensation to be fee-based. You want to sell a lot, and you know you will make more money this way. At least that’s the impression you want to make on the interviewers…

What Your Financial Advisor Isn' T Telling You Pdf free. download full

Behavioral questions you may get in your Financial Advisor interview

Behavioral questions test your attitude to various situations that happen in a job, such as problems with motivation, conflict with a colleague or a customer, meeting a deadline, etc.

While they won’t necessarily ask them in every interview, you will nearly for sure get at least some of them in big investment banks. For example:

  • Describe a situation when you were under pressure in work. How did you handle the pressure?
  • Describe a conflict you had with your colleague, or with a client.
  • Tell me about a time when you felt overwhelmed with work.
  • Describe a situation when you went above and beyond with your service for a customer.
  • Describe a situation when you reached a goal and tell us how you achieved it.
  • Tell us about a time when you show initiative at work.
  • Describe a situation when you had to motivate someone in work, or when you struggled with motivation.
  • Who has impacted you the most in your career?
  • Describe a time when you struggled to communicate something to your client. How did you manage to get your message over?
  • Describe the best and worst project you’ve ever worked on.

* Special Tip: If you are not sure how to answer the questions from my list, or experience interview anxiety, have a look at our Interview Success Package. Up to 10 premium answers to basically all tricky questions you may face in your job interview (including the role play) will help you streamline your interview preparation, outclass your competitors, and eventually get this job. Thank you for checking it out!

Final thoughts

Personal questions, behavioral questions, and a role play. Interview for a Financial Advisors seems to be very difficult, but it is not always the case.

While you may compete with fifty other applicants while trying to get this job in a prestigious investment bank or brokerage firm, and will need all your skills and amazing interview answers to succeed, you may face virtually no competition in an interview in a smaller company, or one with a below-average reputation. Consider your situation wisely, and prepare accordingly. I wish you good luck!

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