Have you heard about people who work as financial planners? What about financial consultants? If these two terms are familiar to you, then you know they are people who work for investment firms. Investment firms usually earn their revenue by charging you fees and interest after they recommend specific plan of attack or investment product. By leveraging their expertise, you need not work and do your research yourself. But how true is the advice given by these investment firms? Are they solid and sound advises Could they be deceiving you of your money and gaining on their self-interest only?
The problem with investment firms is that they often have conflict of interest. What is a conflict of interest? It happens when firms pay their salespeople (financial planners, brokers, consultants, etc.) on a commission basis. Therefore, the employees will always push for greater sales and not serving the best interest of the customers (maximizing profit for the particular customer).
You would want to avoid financial people who are involved in broker-dealer networks. Usually, they come from the same source of financial expertise.
Investment types are aplenty out there in the market. There are the bonds, stocks, money-market, mutual funds, options and futures, annuities, limited partnerships and so on. Salespeople often earn the largest percentage of commission from options and futures. How do you know a firm operates on a commission basis? Look for the prospectus and find a term called “load”. If the word “load” is present, it means some of your hard-earned money goes to the commission instead of going straight to your investment.
Beware of salespeople who do not reveal much about the company background, especially with terms like vice president or financial consultant. You have every right to be dubious when you find the investment sounds vague or unclear to you. Never give in to pressure created by the salesperson. You deserve to take all the time in the world to decide on a certain investment type.
You would want to obtain unbiased reviews and opinions on an investment product. Often times, the best in the market can be obtained for free-load (no commission).
Stockbrokers or financial consultant who sells investment products must be professional and responsible. They are largely accounted for giving sound advises to customers who need it. But in reality, most of them are abusing their positions to instill unnecessary fear and devising tedious strategy to boost their own sales.
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