25 Things Your Financial Advisor Doesn’t Want You To Know

Want to know what is important to the big brokerage firms, insurance companies, and banks that you deal with? Here are some of the secrets that I learned from behind the curtain and that your advisor will never tell you…

  1. The company I work for only has sales meetings, not investment management meetings.
  2. My real job is just to gather money, not actually manage it
  3. I am not a fiduciary and am not required by law to act in your best interest (ouch)
  4. My title is financial advisor but I have never read a personal finance book and I can’t help you create a budget.
  5. The income I receive from the investment often dictates the types of investments I recommend to you. If it puts more money in pocket than it fits your investment style the best! (skim through this 42 page document to see how the advisors at Edward Jones get paid)
  6. Some investment products have hidden fees… actually most of them do.
  7. I call you at the end of the month with a great new idea in order to meet my sales quota (aka production) so that I can keep my job/get a bonus.
  8. My company provides daily advisor rankings to show who brought in the most new assets/accounts or to show who made the most commissions off of investments. A ranking list to show which advisor has performed the best for their clients does not exist.
  9. I sold you a structured product, closed-end fund, mutual fund, an annuity…because the commissions are HUGE and HIDDEN so you don’t know how much you paid.
  10. When I ask a question to my superiors about an investment, I am told not to worry about it, just go find more accounts and New York will handle the money.
  11. In some cases, I get paid a yearly management fee on top of the actual investment managers getting paid their fee. In addition, I get paid commissions and trailers on the sales of annuities, mutual funds, structured investments, UITs, bonds, closed-end funds, etc. Guess how much that affects YOUR return???
  12. My firm sometimes offers enhanced commissions/bonuses to me if I will quickly sell the investment they own that they expect to lose value. They win, I win, you lose.
  13. Often, I get paid mutual fund 12B-1 fees which are hidden. (seriously, take a minute and go read this article about them)
  14. I only got this job because my dad/uncle/cousin is the boss, I come from a family that has money, or I was a good used car salesman. Unfortunately this just continues to destroy the reputation of our industry.
  15. The annuity I sold you can cost anywhere from 3-5% per year and you certainly won’t see this on your monthly statement. O yea and I made a commission of over 10% in some cases to sell it to you. (Want to see an example of how crazy this stuff is? Click here or here)
  16. The “comprehensive” financial plan I put together for you took my secretary about 15 minutes to complete and all they had to do was plug numbers into some software to get a desired return rate. How I am going to achieve that growth rate is a totally different story since I spend most of my time looking for new clients.
  17. I manage several hundred accounts and you are #? on my list…
  18. You have to be fully invested at all times and cannot be in cash since I only get paid on the fully invested portion of the portfolio.
  19. Looking at my firm’s research and following what they tell to me sell is my investment strategy.
  20. The majority of your investments underperform the market, but your statement makes that impossible to figure out.
  21. My research is outdated and limited strictly to my company’s analysts.
  22. I will never recommend that you invest in gold/art/real estate/etc because I won’t get paid for it. Plus, my company would fire me immediately.
  23. Even though I “manage” several hundred accounts, my company wants me to find more.
  24. I might switch my current brokerage firm or bank. The new one will most likely not be any better for my clients, but it will give me a substantial upfront bonus. I will most likely repeat that in a few years.
  25. 99.9% of the trainings my firm provides (and requires me to attend) are designed to make me a better salesman.

As a boutique wealth management firm, Kovar Capital doesn’t have sales meetings or quotas to make, our only focus is providing your family with the best financial planning experience possible. To schedule an introductory consultation please contact our office at (844) 568-2747 or click here to be taken to our online schedule.