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Tuesday, October 11, 2016

3 Ways to Protect Yourself From Bad Financial Advice

Throughout our lives, we often get approached by friends or family to tell us all sorts of “KangTao/Lubang”(tips). However, more often than not, the "KangTao" is usually in the best interests of themselves.

3 Ways to Protect Yourself From Bad Financial Advice Fiduciary

Unlike in the U.S, whereby the Department of Labor will be implementing the Fiduciary Rule next year, which will help to put the other’s needs before anyone else, otherwise they can get sued if they wrong them. In Malaysia, there's no such a rule yet except having "Avoid Conflict of Interest (BNM)" or "Integrity (CFP)" as one of the code of conducts and ethics. 

So how do you protect yourself? 

Here are the 3 Ways to Protect Yourself From Bad Financial Advice:

1. How Are They Being Compensated? 
Be it an introduce-r, agent or advisor, the person should put in writing all the fees and commissions he or she will be receiving from all sources. Do they get certain percentage from the money you invest? Do the products they recommend contain charges that they will receive? Part of the problem with them is that they will make you focus on your potential return and not telling you exactly how much money they make in what they’re selling you. Put everything (written form) on the table.


2. Is Their Advice Conflicted? 
They should give a “reasonable basis” for the advice they are giving you. If they recommend a product or service, you should know if they are getting a commission or other fee through the transaction. Also ask if they will receive bonus or incentive trip for making recommendation. They should always make recommendation because it’s in your best interest (which they always claim to be), not theirs.

3. Are They Qualified to Give You the Advice You Need? 
Learn from the right people, not just anyone. You need to know if they can give the advice that’s tailored to your financial situation and not like anyone else? (Others have it doesn't mean you should have it too!) Are they qualified or in the right position to give you the right financial advice? You’ll probably need to find a licensed financial advisor with CFP or RFP certification. Again, you need to know if your advisor can provide un-conflicted advice in these complicated areas.

3 Ways to Protect Yourself From Bad Financial Advice Fiduciary

Keep in mind that without the Fiduciary Rule in force in Malaysia, you’re on your own! There is no government body forcing the fiduciary rule on anyone. So in the meantime, seek out advisers who abide by the fiduciary standard. They are generally certified financial planners, chartered financial analysts, certified public accountants and licensed financial advisers.


Avoid those who are merely introduce-rs, agents, brokers, “registered representatives” or “wealth managers” who are not fiduciaries, whereby they probably not going to find you anymore after the sales. So the next time any KangTao comes up to you, remember to ask these questions to protect yourself from bad financial advice! 

Till then. ;)
In supporting of upholding ethical conducts!

37 comments:

  1. Truly very useful information on financial management and hope this information will help me in finding a right personal financial advisor. Came across few personal financial advisor Las Vegas who seemed to be good and will be contacting one soon.

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    1. Thanks for reading! Hope you know how to protect yourself from bad financial advice now!

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  2. Replies
    1. Thanks for reading! Hope you know how to protect yourself from bad financial advice now!

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  3. Replies
    1. thank you! hope you can make better financial decision now! ;)

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  4. Thanks for the info and advice. Kena cari financial adviser yang betul-betul berkelayakan dan berpengalaman.

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    1. yes, most importantly someone that can represent you, not represent other company! ;)

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  5. The one that I always afraid of is sales representative who crazy about making sales but in the end, they don't return our calls, return our enquirers and such. That is so frustrating

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    1. yes exactly what i am trying to say! i think we all had that bad experience! haha

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  6. It is not easy to get a good financial advisor.
    Been into some investment but no good ROI. Now I am more selective in choosing the instrument to invest and to advisor.

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    1. yup, that's right! and you can read my other post, it's not just looking at ROI but IRR/annualized return more important!

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  7. I always look for my trusted agent. Money easy go but hard to earned.

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    1. yes exactly, so we need to safeguard it better.

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  8. yeay !! really need this advice.. hee~ thank you..

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  9. Good info. Bagus advice dari u. Nanti I kongsikan dengan family dan suami. Kadang terlupa.

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    1. yes, it's simple but not all of us aware of it.

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  10. Penting nya dapatkan khidmat nasihat dari orang dan saluran yang betul kan. Harap2 satu hari nanti Malaysia pun ada Fiduciary Rule. Brulah rasa tak tertipu.

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    1. yessss you are right! orang dan saluran tu penting! thanks for actually reading it! hehe

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  11. i dont know much about finance, but with your sharing is good info for me

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  12. Yup..jika nak melabur memang kena cr finance adviser yg betul2 bertauliah dn berpengalaman, selebihnya kita yang akan tentukan samada nak atau tidak melabur tanpa paksaan dr mana2 pihak

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    1. yes you are right! thanks for reading!

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  13. I get what you mean, I gave up on using a FA and started to learn simple ways to earn through fundsupermart instead.

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    1. lol i think you mean agent, FA and agent are two different position. ;)

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  14. advice yang sangat berguna untuk proteksi keuangan dan resiko

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  15. Good info and boleh sharing info ni pada kawan-kawan juga

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    1. yes, simple but not many people know. ;)

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  16. This is one great advise as people nowadays are desperate in making easy & fast money, without thinking straight. I hope we will be a learned society about our rights.

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    1. yes you are right, instant gratification, everything want it fast and easy. that's what i hope too, and im doing my part in increasing the awareness! :D

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  17. It is important for us to evaluate each info before we decide something especially in financial management. :) Good info & sharing Henry! :)

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  18. Gud advice...
    I need to share with my husband...
    Both of us need to find a gud financial advisoršŸ˜Š

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  19. The most important thing is we have to get the advice from trusted people. Not simply some people, i mean if we just want to hear their opinion than its ok.

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