Ted Rechtshaffen is president and CEO of TriDelta Financial Partners, a firm that provides independent financial planning advice and a guest columnist for Globe Investor. He was vice-president of business strategy at a major Canadian brokerage firm and found that the interests of the client were often not aligned with the interests of the adviser or the interests of the company.
This is part one in a series that looks inside the financial services industry at what advisers tell their clients and - more importantly - what they don't.
For all the feel-good TV commercials that talk about fulfilling your dreams and how each person has a different financial plan, do you ever feel like you've just been sold something more befitting your financial adviser's plan?
There may be a reason you're being pitched a product you didn't know you wanted - it's Visa month! Or it could be principal-protected note month or GIC month or emerging markets mutual fund month.
Believe it or not, your financial adviser may be faced with a quota to sell a certain amount of a particular product in any given month. If so, and if you buy in, you'd better hope it's something that fits your personal financial plan. This can be quite common among some of the larger financial institutions.
Let's think about this for a second: You have your personal risk tolerance, debt situation, cash flow needs, and if you are working with someone who has done a good job for you, they have helped to set up a financial plan that fits all of those needs. Now along comes a new month, and unbeknownst to you, your financial planner has a quota to sell 25 new Visa cards this month. Guess what? You are likely to hear about all of the great features of the new Visa card as soon as you step into your adviser's office.
Personally, I think this practice is at best unethical. While a truly independent financial adviser whom you trust will never need to be a party to this, an employee in a big company has little freedom or flexibility when it comes to such questionable selling methods.
Keep your eyes and ears open when "great" products are suddenly recommended to you. They may be recommended because they truly make sense for you and your needs - and may have nothing to do with any monthly sales promotion.
Just the same, if you want to have some fun, next time you think you are being sold something that may not be right for you, ask your adviser this question: "Is this part of the monthly product promotion?" If you get a look that resembles a deer caught in headlights, I think you know the answer.
Other articles in Ted Rechtshaffen's Adviser Secrets series: