Many givers of advice have good intentions and they aren’t out to intentionally hurt you. Whether it’s a family member, an author, or a talking head on TV, they may really want to help. However, they are not you. They don’t know your dreams and desires, your risk tolerance level, your financial knowledge level, or any of the other hundreds of things that factor into your decisions about what to do with your money. They’re just telling you what worked for them and that may not work for you.
Other people are paid to give you advice. Your banker, financial advisor, or broker are examples of these advisors. On the one hand, this could make them more reliable as you would hope that anyone who is advising people professionally knows what they are doing. Many do a very good job at getting to know you and your needs and dreams. Some, well, let’s just say they don’t try very hard. Some advisors are even unethical and are only interested in selling you the latest product to pad their commission. Their product may not help you at all. They don’t set out to hurt you, but neither is their advice helpful.
Then there are the outright scammers. These are the people who know their product is worthless but yet they want you to buy it so they’ll make money. They don’t care if you lose your shirt as long as they get paid. By the time you realize that their “advice” is bogus, they’re often long gone, leaving you with nothing.
To avoid getting completely burned, confused, or hurt financially, make sure you only take advice from people you really trust. Even then, do your own research before you act on anything anyone tells you. If someone tells you about a hot stock, for example, jump online and check it out for yourself. Or, call someone more knowledgeable or at a different firm for a second opinion. If someone tells you about a way to save money that worked for them, give it some thought or maybe try it on a limited basis to see if it’s something you can really incorporate into your life. What works for one person may be unacceptable or useless to you.
It’s not only the advice that you want to check out, either. Make sure you check out the advice giver, as well. You don’t need to run a check on Uncle Joe, necessarily, but check out anyone who’s giving you “professional” advice, particularly if you’re paying for it. Make certain that they are reputable and that they work for a reputable firm. Ask for references and check those, too, to make certain this advisor isn’t giving bad advice to lots of people. Understand the advice giver’s relationship to the product they’re encouraging you to use. Are they impartial, or are they getting paid a commission for selling it to you? Get a second opinion about anything that you’re unsure of.
And the same rule applies to financial advice that applies to most financial transactions: If something feels off to you, trust your gut and let it go. Your instinct is a powerful tool and if someone giving you advice is making your nervous in any way, walk away. It’s better to miss out on a great opportunity than to get sucked into a scam.
It can be helpful to get advice regarding financial matters. It’s a complicated field and the help of others can make it easier to understand and expose you to great options that you might not otherwise consider. Just be careful about taking advice and make sure both the advice and the advice giver are trustworthy. You’ll save yourself a lot of trouble and heartache in the future.
(Photo courtesy of Unlisted Sightings)