How can you make the best decision regarding your financial planning? There is so much speculation about the power of insurance companies and the way they are always in the news. I find the media is usually biased. While some people may have been given a hard time, there are many companies that have taken extraordinary steps to improve the transparency of their contracts. Some companies make a greater effort to educate potential clients so that they can make informed decisions.
One bad policy decision can have a devastating effect on your entire life. There have been many investment strategies that were not easily understood by the public in the past. Public trust their financial advisors to make the right decision for them. If a system isn’t in their best interests, it is useless to have the best financial advisor.
My goal is to help my clients make the right decision. My job is to make sure that my clients are well-informed about the basics of investing and how fund managers work.
Contrary to the past, you have a wider selection of fund managers. Multi-managed funds allow you to have access to multiple expert managers, and not just one. Funds can be changed if they perform poorly because there are benchmarks. The product’s flexibility makes it much more flexible than in the past when you could only put money into one fund. Your broker would not be able to monitor your funds constantly and you wouldn’t know if your funds were being moved.
Early cancellation fees are the most controversial factor that has been much debated. These fees have been in place for years and have caused great outrage from the public. This can be viewed in two ways. Either the advisor didn’t make the charges clear enough or the client did not know that they would need to hold their investment for the full term in order to avoid the charges.
Even though many contracts are not as transparent as we would prefer, the policy owner must accept some liability and acknowledge that it was a long-term plan. This plan would not be subject to “early exit” fees if people followed it. However, there is a problem when someone invests in risk products. There would be fees if the client decided to cancel and no longer needs this product. These should be kept separate to allow for flexibility.
The question I’m asking is this: Do you and your clients know if their investment allocation is 100%? Are you able to inform them so that they don’t get disappointed? There are now products that provide 100% allocation and no cancellation fees for a shorter period of time. This is a great news! If you are selling or purchasing an investment, pension fund, or retirement annuity with many bells and whistles, make sure that you fully understand the details. You, the client, will be able to make an informed decision. This will also ensure that the advisor has educated the client about the relevant issue.
