Financial Products "Sold" by Financial Advisors

"If you have a hammer, everything looks like a nail." ~ proverb popularized by Abraham Maslow

I have learned this also applies to many financial advisors, who earn money based on the product they recommend.

If a advisor selling a specific financial product, then that is the number one personal finance recommendation he is likely to make.  Insurance financial advisors tend to recommend insurance products.  Brokerage financial advisors tend to recommend stock and bond products.  Mutual fund advisors tend to recommend their own mutual funds.  Secondary offering advisors tend to recommend their offerings.  Tax advisors tend to recommend investment that minimize tax liability.

While it is legitimate for an advisor recommend a financial product for which he is compensated, I feel I need to do more diligence before accepting the recommendation.   I do more independent research on the product to decide.    In most of the cases, I decide not the invest.  Examples include: Private Credit, Indexed ETFs, Opportunity Zone Real Estate and most Life Insurance based products.   They may be right for some people but not for me.

Some options that I have used include but not currently:  Actively managed separate accounts. I like the idea of have individual stocks in my own account.   However, I've  recently moved away from this option.

Currently, I'm considering a robo investment platform offered by one the brokerages.  I expect the advisor that recommended may get compensated.  That's OK since I am doing an independent evaluation of the product on my own.

For more on Reflections and Musings check back every Saturday for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

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