7 Red flags the financial advice you’re receiving is not in your best interest

Have you ever gotten advice that just doesn’t feel right? The financial industry is filled with many great professionals and professional bodies (think accreditation). However, there are also some unsavoury characters out there that are definitely interested in your money, but not necessarily in helping you. But how do you tell them apart? Here are seven red flags indicating you’re receiving advice that’s not in your best interest:

1. It sounds too good to be true

If you’ve been declined for conventional credit and you find a lender that’s happy to lend to you, this is a pink flag. Find out why their criteria are so different than those of conventional creditors. Perhaps the organization is taking on more risk and you’ll end up paying for it in higher interest rates. Where the pink flag becomes red is when something sounds way too good to be true. Can you only pay 10% of your debt? Can you change your bank account and assume that creditors won’t take action? Can you really stop talking to your creditors and assume everything will be okay? No, you cannot. Trust your gut – when things sound too good to be true, they often are. Diving into such claims can cost you money, credit, and a lot of energy.

2. The advertising doesn’t compare apples to apples

Some organizations will advertise their best offers, not the ones they’ll actually give you. These misleading advertisements are typically about the borrowing rate or the timeline. Look out for claims like:

• 0% interest. Ask yourself, who qualifies? For how long is it 0% interest?

• $150 weekly for a car payment. This may feel more manageable than $600/month, but they are the same value.

• Payday loans using two weeks as the borrowing period to calculate the interest. Again, 15% over two weeks sounds more manageable than 300% APR (annual percentage rate), but they total to the same value. Don’t fall for the facade of enticing advertising. Do your math to find out what your offer really means.

3. They’re glossing over paperwork

Notice if the financial advisor you’re working with goes through paperwork at breakneck speed. Yes, paperwork isn’t exciting; but they are necessary to know the details, and especially the risks. Albeit boring, paperwork review should be thorough and the risks, like interest rates and credit score impacts, should be highlighted. The financial advisor should also respond to all your concerns to your complete satisfaction. If they refrain from responding to your questions or gloss over the answers, they aren’t the right advisor.

4. They want you to make a decision today

This is a major red flag. If you’re expected to make a major financial decision without first talking it over with your people and possibly getting a second opinion, it’s time to leave. Professionals should encourage you to seek second opinions and review any documentation with a spouse or partner before committing to a decision.

5. There’s more than one advisor in a meeting

Extra attention can be nice, but if another advisor or, even better, a supervisor joins your meeting, question it. In fact, feel free to point it out by asking, “I’m curious why you’ve asked someone else to join us?” or “What’s the purpose of your manager joining us?” There may be a good reason; maybe your main advisor is in training. However, it can also be a sales pressure tactic to bring someone else into a meeting, especially a manager. Remember that just because they lean on you to commit doesn’t mean you need to give in.

6. They’re disparaging other organizations in the industry

Be mindful of “professionals” who point out the weaknesses of colleagues or organizations in their industry. First, it lacks tact. Second, true professionals let their reputation and actions speak for themselves. They focus on how they can help and support their customer, not how they can bash the competition. And third, if the professional gets you to focus on another organization’s faults, you’re not focusing on the organization or professional in front of you, who deserves your scrutiny and judgment.

7. Their office walls and websites are missing some paperwork

Anytime you’re working with a financial professional, look at their walls or websites and notice what you see — and don’t see. Professionals and organizations who have qualifications, are accredited, and/or are members of certifying bodies tend to proudly display this information as they often take time and diligence to achieve. If the person or organization you’re working with doesn’t have anything to show, this is a red flag. Ask yourself why and whether it’d be wise to trust them with your money. Additionally, professional individuals and organizations should be open and honest about what their fees are (every single one of them!) and what they cover; only dubious professionals lack this information.

Money is so much more than dollars and cents; it’s about how we feel about it. It’s tied to our values and beliefs, making it hard to be objective at times. That’s why you need to remind yourself that you’re in the driver’s seat. Trust your gut, reject the pressure, ask questions, and feel confident in walking away at any point.

If something doesn’t feel right, seek a second opinion from an accredited non-profit credit counselling organization like the Credit Counselling Society.

You can chat with an accredited financial counsellor anytime about your situation and trust that you’ll receive reliable, unbiased advice and resources. Or check out Credit Counselling Canada to find an organization in your area. Remember, it’s your money.