Financial advisors have had a bad reputation and in some cases, it is justified not only since the outbreak of the financial crisis.

It is estimated that consumers lose an estimated 50 billion euros each year in private retirement provision and other financial investments as a result of inadequate advice and unusable information. But how can you recognize good and competent consultants?

Check, explain and challenge

Basically, consumers should check the status of their advisor. Does he work for one or more insurance companies, is he a broker or does he advise against a fee?

As a rule of thumb you can remember that if the advisor can only fall back on a small offer because he only works for one or a few insurance companies, he will in all likelihood stick to his own products to make money.

It is doubtful that this is always a good thing. When giving advice, consumers should therefore always remember that the financial advisor always wants to sell something. Only in the case of fee consultants, who are paid time-dependent for their services by the customer, can one expect real advice without pressure to sell.

Consumers should explain their personal situation to the advisor. To develop transparent solutions, the financial advisor should competently inquire and document the goals of the consumer, his risk attitude, previous investments as well as his experience and investment horizon. If he does not, the counseling should be discontinued.

Good advisors give customers enough information and time so that they can decide for or against a product. Consumers should also request appropriate information such as investment prospectuses, investor information, or sample calculations, especially when it comes to all-around care.

Take your time and do your own research Consumers mustn’t sign immediately. Even the best system is still available the next day. If a financial advisor is competent, he will give his customers enough time and wait for the customer to contact him and not the other way around.

The pressure on consultants to bring a conversation to a close is immense. Many are therefore tempted to pass the pressure on to customers. What some consultants understand as personal support is quickly perceived by customers as putting massive pressure on them.

Consumers should be especially careful about anything they do not understand. There is no shame in not understanding every investment product. Many products are so complex that fees and costs are cleverly disguised.

It is best to continue researching on your own if the product sounds interesting. Pages like the ones from Stiftung Warentest or, but also (critical) forum contributions are valuable sources of information, especially when it comes to all-around care.

Consumers should watch their advisors closely. While personal attention and transparent solutions are very important, consumers should be alarmed as soon as the advisor suggests re-examining everything or claims that an insurance company is no longer up to date. In such a case, the consultant will probably receive new commissions if the deal is successful.

Pay attention to your gut feeling

No matter how well you get information, exchange experiences, and check the things mentioned above, in the end, the interpersonal plays a decisive role. If you already have a strange feeling at the beginning of the consultation, you should pay attention to your gut feeling and break off the consultation.

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