Eight things a brutally honest investment advisor would tell you about fees, returns and more

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From debt payments to fees to lower-middle class investors, eight brutally honest points should be considered by investors when talking to their investment advisors.Steve Debenport/iStockPhoto/Getty Images

Discussing the investment year with your advisor will be a lot less fun than it was 12 months ago. Want some briefing notes to prepare for the conversation? To mark Financial Literacy Month 2022, here’s a list of eight things a brutally honest investment advisor would tell you about fees, yields, and more:

Some of your clients would have to stop investing for 12 months to pay off their debts

Investment companies like us make money by applying fees and commissions to assets in client accounts. With interest rates on the rise, debt reduction should be the number one financial priority for people with high levels of family debt. Do you see the problem? Recommending debt reduction is a waste of money for us, even if it provides guaranteed financial benefits to heavily indebted clients and relieves one of the biggest sources of stress in their lives.

We don’t have answers for years like 2022

You know we told you that prudent portfolio diversification is the path to long-term investment success? Funny story. Those bonds and bond funds we put in his portfolio for stability fell like a rock. Sorry, boss. Investing means getting punched in the face from time to time, even as you continue to make progress toward meeting your long-term financial goals.

Forget investments; the value of what we do is in the planning

Honestly, it’s doubtful that anything we recommend will consistently outperform a cheap index-tracking ETF portfolio. Forgive us for pretending otherwise, because our business is still largely based on the outdated idea that financial success is about choosing the right investments. Where our time is most effectively spent is figuring out your financial goals and then achieving them through a combination of planning and ongoing training. Try selling that on a billboard.

Don’t worry about us, we’ll be fine.

As sure as night follows day, our advisory fees are deducted from your account on time. The investment company always gets paid, now that’s a rule you can count on.

Middle class and low income people are a wreck for us

We may tolerate clients with less than five figures to invest, but frankly they are a pain because they do not generate enough revenue from fees and commissions. Now, don’t expect us to say it outright and post minimum account sizes prominently on our website. That would be vulgar. Instead, we rely on cues like repeated use of the word “wealth.” Forget tips: the business we’re really in is wealth management. If you don’t have a lot of wealth, try your bank’s mutual fund counter.

Junk investments appear in our portfolios

Expensive mutual funds? Yes, we have been known to use them on client portfolios. In-house funds comparing poorly to third-party offerings? Blush. New fashion products to cash in on trends where easy money has already been made? maybe baby There is an aspect of entertainment in the business of investment advice. Keep customers entertained.

We are good at talking to investors, not with them.

You say you’re losing money, we say the markets are volatile. You say your bond funds are being butchered, we say fixed income faces challenges. Speaking in platitudes and jargon helps us gloss over the chaotic aspect of investing and make it seem like we have things under control. Not us, that’s what financial planning is for.

You’re a bit lazy, yourself

I, your hard-working consultant, put together a financial plan for you after many hours of work, and file it with your 1975 Catskills vacation slides. I tell you it’s a good time to invest because stocks are down and you say you’ll wait for the market to bottom. I ask you to stay in touch about the events in your life and you forget to mention that you are getting divorced, you used your retirement savings to give your teenage son a down payment on the house and your boss has been avoiding you for months . You are supposed to be my co-pilot in managing your finances, not a passenger.

brutally honest banking

Check out last year’s list of six things a brutally honest banker would tell you about mortgages, home equity lines of credit, and market-linked guaranteed investment certificates.

Are you a young Canadian with money on your mind? To set yourself up for success and avoid costly mistakes, Listen to our award-winning Stress Test podcast.

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