Part 3 of the The Never-Do List – 22 Good Ways to Avoid Financial Advisor and Investment Counselor Frauds and Scams This article discusses things that you should “never do” with a financial planner or investment advisor, and it covers unsolicited advice, sales pressure, and account decision-making discretion.
You should never do certain things with a financial planning or investment adviser. This “never-do” list cannot guarantee that you avoid problems with an adviser. However, it could help to reduce substantially the chances of experiencing problems, financial frauds, and investment scams.
The Skilled Investor’s list of “never-dos” with an adviser has been split into several articles. For the other articles in this series see,
Avoiding financial planning and investment advisor frauds and scams – Overview 22 Good Ways to Avoid Financial Advisor Frauds and Scams – Part 1 22 Good Ways to Avoid Financial Advisor Frauds and Scams – Part 2
Many of the items listed are either illegal or widely viewed as unethical. However, legality or ethics will not stop a crook. Others of these practices are legitimate and frequently encountered in the advisory industry, but they are potentially subject to abuse. If an advisor suggests listed items, you should have heightened concern, and you should not ignore the matter. If the adviser does not have a good explanation and you remain uncomfortable, just find another adviser.
Avoid unsolicited advice and heavy pressure from a financial planner or investment advisor
NEVER respond to telephone “cold calls” or reply to unsolicited financial planning or investment pitches that arrive via letter or email.
If you need the services of an advisor, be proactive instead and go find a good advisor. Most established advisors use referrals for new business. Most advisors who approach you by telephone and mail are focused on selling commissioned financial and investment products.
Of course, legitimate advisors will advertise their services, but they will avoid pressure tactics. If you are the party that initiates contact during your screening process to find an advisor, then you are far more likely to have a satisfying advisor relationship than if you wait for the phone to ring.
NEVER respond to financial planner and investment counselor pressure of any kind.
If you are being pressed to act on anything and you are not comfortable, simply stop and end the conversation. Anyone who will not allow you reasonable time to think and consult other [...]