Are You Getting Bad Advice?

How to Find Good Advisors to Help you Achieve Your Financial Dreams

Last week, I talked about getting rid of negativity, writing down your dreams and taking action. Well, an important part of making your dreams a reality is getting good advice. If you follow bad advice, you can lose lots of money – not to mention your valuable time. With this in mind, the question becomes…

How Do You Tell Good Advice From Bad Advice?
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You are bombarded with information every day from numerous sources. It’s up to you to decide what’s important and what’s not, especially when it comes to your financial education. To do this, every time you hear some news, ask yourself:

“What does this mean to me?”

Relate the information to your specific goals and dreams. Question everything, and decide whether or not what you hear is true or false. If you don’t know, it’s time to learn more about the subject matter. And while you can delve into books, the Internet, videos, events, and more to find information, a trusted advisor (with vast experience and knowledge in a particular subject) can provide answers and give you a completely different perspective on an issue.

But beware the bad advisor!

You want to get good advice that will help you get answers and make good choices. To do this, here are…

Four Questions to Ask to Help You Find a Good Advisor
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  1. Are they successful doing what you want to do?

    How often have you taken advice from a financial advisor, friend or relative because you trust them? That’s fine, but are these people actually successful at what you are trying to accomplish? Do they even know what you are trying to accomplish?

    So many financial advisors are poor, but they sit behind a desk and say they will help increase the investments and wealth of their clients. Many guidance counselors will tell you to go to school, take out a loan to pay for it and then get a job working for someone else. That’s all they know.

    Well, what if you don’t want to invest in your cousin’s business or a 401K?
    What if you don’t need a degree to do what you want to do?
    What if you don’t want to work for someone else and you want to start your own business?

    There are a lot of people you’ll want to avoid when it comes to getting advice. Instead, look for people who are actually successful at what you want to do in life and have experience in that particular field.
  2. Do they practice what they preach?

    Many “advisors” will give advice to others and then do something completely different for their own, personal well-being. For example, many financial advisors may promote a specific, life-insurance policy or fund to you. In reality, they get a commission whenever they sign anyone up for these programs, but they would never purchase these policies or funds on their own.

    Another example is a friend without a college degree or job who tells you to get an MBA because that’s what you need to get ahead in this world. Really? Does this person have the experience and knowledge to give this advice?

    When looking for good advisors, look for people who actually do what they advise. Does your real estate investor invest in real estate successfully? Does your business advisor run a successful business? You get the idea.
  3. What is the source of their information?
    When an advisor gives you tips, where is this data coming from?
    Are they employed by a specific company pushing a specific investment?
    Are they endorsing products and services they get a commission from selling?
    Are they getting benefits for endorsing a specific investment?

    Before you accept advice, consider the source.
  4. How do you get paid?
    When talking to a potential advisor, figure out if that person is just trying to push their own agenda. Are they trying to sell you something? Ask how they get paid, and you’ll get your answer. If you’re still not sure, look at the person’s background and record. Do they practice what they preach?

Trust Your Gut.
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Once you ask all of these questions, you’ll know whether or not you are talking to a good or bad advisor. And if you still aren’t sure, trust your gut. Ask yourself if you really trust this person and what they are saying. Then, make your decision.

By being careful about the advice you take, you’ll be much closer to reaching your financial dreams without wasting your time, money or effort.

What questions are you going to ask your current advisors today on your journey to financial freedom?

For additional help, check out our free, financial education community here.

Original publish date: November 01, 2012