Lets face it. When it comes to free, consumers are like a moth to the flame. They just can't resist a bargain. Free shipping, BOGO, and free samples are just a few of the ways that businesses entice us to buy their products and use their services. So powerful is the attraction of the word "free" that Prof. Dan Ariely in his groundbreaking book "Predictibly Irrational" points to an example where Amazon flirted with one cent shipping in France. It was a complete disaster. Once Amazon began to offer free shipping sales immediately picked up.
So what should investors make of offers for free financial advice or a free review? Be skeptical. Historically, stock brokers, investment professionals, financial advisors (the list of titles goes on and on) would offer a free or complimentary consultation to review your financial situation. On the surface this seems like a no-brainer. However, and this is not obvious to most consumers, a free review creates a conflict of interest on the financial professional's part. By offering their services on a contingecy basis the advisor is now incentivised to find a product or service that they can sell to justify their free service. This is one reason why the public has such a distrust of financial advisors.
The alternative for investors who seek financial advice is to find a financial planner or financial advisor who offers their services in exchange for a fee. Many advisors, myself included, are happy to provide a second opinion on a variety of financial topics in exchange for an hourly fee or fee-per-project. This not only helps to remove the conflict of interest on the advisor's part, but also makes our services accessible to many investors who prefer to handle investing themselves, but would occassionally like a second opinion. It also opens the door to work with the aspiring affluent who may not yet have much in the way of assets, but would like financial guidance none-the-less.
Where can you find such a professional? The CFP® Board sponsors http://www.letsmakeaplan.org which allows you to search for a Certified Financial Planner™ who is obligated to put your interests first. If you are in Delaware, Maryland, or Pennsylvania, you can also schedule a 30 minute "getting acquainted" phone call or video chat with me to discuss your needs and obtain a fee quote. http://www.davidiobst.com/contact_us/.
About the author: David A. Iobst is a Certified Financial Planner™ with nearly 20 years of combined financial planning and insurance experience. He is located in Bear, DE and maintains securities and insurance licenses in Delaware, Pennsylvania, and Maryland. You can find out more about David by visiting his web site http://www.davidiobst.com.
David offers securities and investment advisory services through LifeMark Securities Corp. 400 West Metro Financial Center Rochester, NY 14623. Member FINRA/SIPC.