Getting the right financial advisors

This guide sets out the strategies that I use to identify techniques used by bad financial advisors and ultimately share tips that help me lean towards selecting the good ones.

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Now that you’ve read my guide to get started with insurance, it’s time to address the elephant in the room. A section in the guide mentioned about reaching out to financial advisors for insurance policy advice and insights. However, we all know the trauma associated with that: hard sales pitches, conflicts of interests and predatory sales techniques to manipulate you into buying something that you do not need, or worse, buying something that is detrimental to you. They cost you money and also set you back years of progress.

Getting the right financial advisor is extremely difficult and it is something that requires some judgement. As with all topics, a good advisor acts as a mentor that can save you painful mistakes and fast track your success. They can also add a lot of value by helping to provide assistances for insurance claims, sharing market updates on policy and regulatory changes and reviewing your portfolio. You should not shun getting advisors but rather know how to keep the good ones.

I am also fearful of the same negative consequences and have compiled various anecdotes from financial advisors and customers, research on sales tactics[1] and personal encounters. This guide sets out the strategies that I use to identify techniques used by bad financial advisors and ultimately share tips that help me lean towards selecting the good ones.

Red flags or signs of a manipulative financial advisor

Getting the right financial advisors

Drafting a holistic policy summary for you to view all your coverages

This seems un-intuitive at first. Why would this be a red flag since it is an added convenience for you to view all of your policies in 1 place? It is also a common value-add for advisors to provide such service.

While it is indeed useful for you to have the information easily accessible, the key here is that the financial advisor also has the same information since he/she is the one compiling the details. Having this information will allow them to weaponize it against you where they can craft specific reasons to manipulate your thinking and sell things that you do not need. There will always be coverage gaps as we try to balance between premiums paid and the coverages provided. Advisors can simply analyze for coverage gaps, convince you that these are critical needs which you should not ignore, provide a range of “reasonable” options and pitch for one that has the “most value” and affordable price. Truth is: you probably do not need it.

The best strategy forward is simply to do your own tracking of your insurance policies. You can either put them in an Excel or subscribe to our newsletter to receive our Insurance policy tracker template. Then using the tracker and armed with the knowledge you have now, you are in a better information position to evaluate if the advisor presents valid explanations on the coverage gaps.

Delivering documents physically even though it can be done digitally

Ever wondered why people are still delivering physical documents despite emails and softcopies being so prevalent? There is simply an ulterior motive to this.

While the financial advisor has closed the sales for you, he/she is always looking for the next person or simply to increase his/her sales pipeline. This means putting themselves in favorable positions to speak to their target clients – clients who have a real need to be solved.

The act of delivering the documents has many benefits:

  • 1. Shows commitment and displays value to you as he/she is willing to take the effort to deliver the documents
  • 2. Anyone who sees the act and are associated with you will take the positive signal of the financial advisor
  • 3. The financial advisor now has a lead in onto more people

The real intention is to go to your place, try to hook and associate with whoever is around to deliver the final question – “Would you like something like this? I can do it for you too.” With that, now they have 1 more lead in the pipeline and can restart the whole upsell process.

Always differentiate genuine services against intentional advances.

Free webinars or consultations

I have attended too many free webinars and consultations to know that they are just a sales gimmick. These webinars do not offer real content beyond what is available online. They are only created to target and narrow down individuals with specific characteristics: folks who want to do more with their money or wishes to protect themselves or family financially.

Once this targeting is completed and you have joined the sessions, they can now use the battle-tested and proven presentation agenda to guide your perspectives and lure you in. As the target audience was carefully curated, the sales tactics will work as people joining the sessions have the similar mindset and objectives. All that is left is to provide a range of options and upsell a “most suitable” one to you.

Trust me: save yourself some time and scour online resources instead.

Persistent or rushed sales process

This is a common technique that is still employed till date. As the header suggests, the financial advisor will persistently push you to close a sale. Or he/she rushes you throughout the sales process, leaving you no time to research or evaluate your options. In both cases, the objective is to limit your time to get information and find options so that they can present their carefully thought out case to their advantage and pressure you to complete the sale.

Another related red flag on this is that the financial advisor made no effort to listen to your needs and understand your situation. Instead he/she is simply motivated to push forward along the sales process to close the deal.

Positive signs of an ethical financial advisor

Getting the right financial advisors

Insurance is a complex subject and selling it is difficult. Selling it in your best interest multiplies the difficulty and increases the time required to close the deal. Hence, it is never in the interest of the financial advisor to do this. Instead, an ethical advisor will simply balance the time required for the sales and provide important value-added service that is in your best interest.

While there are no hard-and-fast rule, this is a framework that I think ethical financial advisors adopt. If you find them, it is best to stick with them.

Value-based selling

  1. Ask the important questions to uncover your needs

With the growth of AI, there is a trend of AI prompt engineering. While this might seem unrelated, it is definitely a skill where the right questions and prompts will solicit the target responses. Similar to AI prompting, a good financial advisor knows the key questions and prompts to ask, so that you can provide the best answers to paint your situation.

  1. Listens to your needs and put themselves in your shoes

The importance of listening to your needs have been emphasized too often by many sources. This guide will not dive too much into it.

Instead the latter point needs to be reiterated. Simply listening to your needs would not be sufficient. The best outcome is where the financial advisors can understand all your concerns, goals and limitations and make the best decision as if they were you.

  1. Does sufficient research and presents realistic options tailored to your situations

Once the advisor has all the necessary information and context, he/she will then need to research for the best available options for you. Not all options should simply be presented but rather carefully curated according to your needs. The key here is that all options should be viable as your final decision. This is especially since you have went through the exercise of explaining your needs in detail.

The options should generally be in a spectrum and mainly offer you a choice to calibrate more finely to balance between each consideration (costs, coverages, gaps, etc). They should not be too off from each other or you might be at risk of a marketing psychology trick [2].

  1. Takes time to educate you on each option and their considerations

This will take time and most financial advisor will rush through this by simply choosing the pre-determined solution as cheapest option amongst the offered range. Your objective here is to ensure that the financial advisor explains through each option as to why each is offered for your consideration and how it matches with your needs. This also checks upon the previous step where each option presented by the financial advisor is well thought off in your position.

Ethical financial advisors will spend the time to walkthrough their research findings, thought process and evaluation criteria before reaching the options that you are seeing. This should feel almost as though you did it for yourself but you are able to rely on your financial advisor to do it on your behalf.

  1. Provide ample time and information for decision making and evaluation

This might seem as a simple opposite of the above red flag (Persistent or rushed sales process) but the key here is to ensure you evaluate the options and progress towards making a decision. More often than not, after the first 4 steps are completed, the discussion ends as the customer, or you, procrastinates from a decision. Making a decision is important. A decision can be both yes (buying one of the offered option) or no.

A good financial advisor is comfortable taking “No” as an answer as long as the client has sufficient time and information to evaluate the options provided and making the decision.

  1. Provides after-sales service

Most financial advisors end their services once the sale is made but the client, or you, it is just the beginning. The real value of an advisor is the after-sales service. While there are no real methods to ensure this happens, you can reduce the risk of this by looking for advisors with credible reviews of providing such service. This can either be from word-of-mouth reviews or online verbatim for their services.

It will ultimately be a trial-and-error process at this point but the above 5 steps should have significantly reduce the risk and narrow down the search.

Conclusion and caveat

It is never easy to find the right advisor in any circumstance. It is ultimately a judgement call akin to hiring the right employee. The above observations may not always mean that the advisor is good or bad. But it does equip you with some awareness and knowledge to “defend” yourself if you do come into such positions.

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1 Reddit thread on sales techniques used by financial advisors: link

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