Have you ever had buyer’s remorse after purchasing insurance or making an investment? Did you ever buy a financial product and wonder, “was this the best deal for my situation? Was the advisor really steering me down the right path?”
Like most Americans in our society, you probably have answered yes to those questions at one point or another. It may have happened right after the purchase, or it may have happened many years down the road after it is too late. Unfortunately, this may have led to a financial set back where you may have overpaid for insurance, lost money on an investment or didn’t have the coverage you needed.
These questions are a common theme and problem in the insurance and investment communities. Many people are making financial choices based on advice or a recommendation from a friend, a co-worker or with the assistance of a financial professional without considering the extent of that person’s knowledge level.
Why people don’t question the education level of a financial professional or friend is fascinating. Is it because they assume that professional should have been trained well? Was it because you believed the amount of time in the financial services business should be an indicator of knowledge? Did you buy into the marketing of the company? Did you just listen to a successful outcome and base a decision on that?
Whatever it was, people generally assume their financial advisor had the knowledge to help them make a proper financial decision but maybe they didn’t. The recommendation or advice you received was directly related to the education that person has received. If the advisor is not well versed, then how can they educate you before making a financial decision?
Financial decisions usually include government rules that need to be considered, tax benefits or consequences, and many have legal ramifications. An investment’s past performance is never guaranteed into the future and can include negative provisions that can cost you money.
The one thing you can do to help protect yourself from making a bad financial decision is to question the person giving you the advice about their knowledge level. Asking how long they have been in the financial business is not enough.
You need to know what training they have received. What have they done to further their education? What additional financial products have they offered to give you a different view? Have they invested or bought that same financial product? What are the upsides as well as the negatives or downsides? Can they explain both sides of the argument? What other options are available and why aren’t they being considered?
In the very near future the US government will be hiring Navigators to help people walk through the health insurance exchanges. However, is their 20-30 hours of training really enough? Will they understand the differences in each company? Will they fully understand the health insurance plans being sold not on the exchange? Will they be able to do a cost benefit analysis? The answer is NOT likely!!
Many insurance agents and investment professionals do go through a training program. They also are required to have continued education to retain their license. Whatever they have learned is what is relayed back to the client. The question is, is what they have learned good enough for your standards?
Your finances are your responsibility. Past financial decisions were based on the information you had at that time. When you think back to those past decisions, if you would have had more or different information from your financial advisor, would you have made a different decision?
Making the best financial decision requires you to examine all angles. It requires you to examine and factor in the worst-case scenarios. Financial success is based on making good decisions and quickly changing bad ones. If the financial professional only has limited knowledge, is it likely you could have missed vital information that would have changed your decision. It is likely you could feel like you have been sold!
Questioning the knowledge level of a financial cannot guarantee financial success. If they have limited knowledge, it doesn’t make them a bad person. However, missing bits of information could be critical to your financial position in life.
As the world gets more complicated, it is those that pay attention that have a better chance of being successful. Applying knowledge correctly can be powerful. Seek help from the financial professionals that continue to increase their knowledge.