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The Risks of Mixing Solicitation and Financial Advice

Updated: Sep 24

Sadly, according to a 2015 presidential report, every year, Americans lose more than $17 billion dollars due to conflicted financial advice. Unconscionable yet completely legal marketing slogans tout “unbiased fiduciaries” or claim to be in “a client’s best interest,” but in reality, are simply solicitations in the form of trusted advice. Outdated and undeveloped financial planning methodologies such as Fee-Only, Fee-for-Service, and Fee-Based attempt to offer a moral framework, but unfortunately come up short having been legally blurred beyond all recognition. As a result, the financial advice industry has few meaningful standards, safeguards, or consumer protections.

Legal and tax professionals, media influencers, and banks have all standardized “revenue share agreements” with financial professionals for the highly lucrative referrals they provide. Far too often, this transaction of trust and lack of clear motivation directly leads to conflicting recommendations and higher than necessary fee structures. To have any chance at “unbiased” advice, a client should educate themselves about the risks associated with mixing financial advice and the solicitation when making consequential retirement decisions.

Risks include:

  • Risk #1: Confusion

  • Risk #2: Lack of coordination

  • Risk #3: Impaired objectivity

  • Risk #4: Exposure to exclusionary behavior

  • Risk #5: Decreased levels of data privacy

  • Risk #6: Potential of unnecessary costs

  • Risk #7: Inability to make personal decisions

  • Risk #8: High levels of fatigue

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