Transparency is your single biggest source of financial risk when you rely on financial advisors to invest your retirement assets. It is the process advisors use to provide data that you rely on to make informed decisions. Risk occurs when financial advisors use deceptive sales tactics that may include providing no data, partial data, or inaccurate data.
Look at it from the advisor’s point of view. There are no industry regulations that require transparency. They provide information that helps them sell retirement products. They withhold information that may cause you to reject their sales proposals. Therefore, it is in the advisor’s best interest to withhold information if it helps him make more money.
How do financial advisors get away with this deceptive sales practice? You do not know what information is being withheld. It could be their credentials, ethics, licensing, business practices, performance, investment expenses and risk exposure.
Needless to say you should only select advisors who practice full transparency. To do that you need to know the five strategies that advisors use to sell retirement services and products.
Salesmen do not practice transparency. They use their personalities to get you to like them. They know you trust people you like. They use trust to convince you they are retirement experts since they know you do not question the advice of retirement experts.
You hear sales pitches and undocumented sales claims. There is no transparency in this sales process. It is up to you to ask the right questions and know good answers from bad ones.
Advisors who practice partial transparency are the most dangerous. They provide information they want you to have and they withhold information they don’t want you to have. You believe the advisor is practicing transparency because you do not know information is being withheld.
Less than 10% of financial advisors practice full transparency. They are real retirement experts who have nothing to hide. These advisors always act in the best interests of their clients and transparency is in their best interests.
A similar percentage of advisors volunteer the information. That is, they do not make you ask the right questions to get the data you need to make informed decisions. They volunteer information for their credentials, ethics, business practices, services, performance, expenses, and other important data.
5. Documented Voluntary
This is the highest form of transparency that is practiced by a very small percentage of financial advisors. Not only do they volunteer information they document it so you have a written record. Your decisions are not based on verbal sales pitches and undocumented sales claims.
This is the type of advisor you should select to help you plan your retirement and invest your retirement assets. Selecting any other type of advisor is creating unnecessary risk.