The Biggest Lies Your Financial Adviser Might Tell You

Aside from putting your first-born child on the bus for their first day of public school, there’s nothing more nerve-wracking than handing your entire financial future over to an investment professional who claims you’re in good hands. Relinquishing control and trusting another to keep your best interests in mind is a scary thing — especially when it’s your financial interests at stake.

The Certified Financial Planner Board of Standards found only 12% of consumers feel advisers put the clients’ interests first, while 60% feel they put their companies’ interests first. At the same time, however, a significant amount (41%) feel the need for advisers has become more important over the last five years. This is not entirely reassuring, considering one bad move could unravel any plans you ever had for retiring to Maui and surfing with the locals.

People lie. It’s a fact. But when a financial adviser stretches the truth, the repercussions are detrimental. In hopes to prevent this from ever happening to you, we’ve created a list of the 15 biggest lies your financial adviser might tell you.

1. I can beat the market

stacks of coins

Your financial adviser could be lying to you. |

Confidence is key in the financial industry. You want an adviser who is comfortable making the big decisions with enough reserve to withstand big-risk temptations on behalf of the client. But any financial adviser who is banking on their ability to beat the stock market and provide exponential returns is already going rouge with your cash. Unless they also have hidden psychic powers, they will almost never truly deliver on that promise — especially when the primary goal of financial planning is creating a means to enjoy a lifestyle you want. If your planner only focuses on beating the market, expect irresponsible investments to haunt you for years to come.

Next: How to know if your adviser cares about your interests

2. I’m working under a fiduciary oath

swearing under oath

Fiduciary advisers are the only professional obligated to protect your interests. | Mark Wilson/Getty Images

You’d hope your adviser would work with your best interests in mind, but some people who claim to be financial professionals are not required to do this all the time. Fiduciaries are the only financial advisers who are legally and ethically bound to act in the client’s best interest.

If your financial adviser is not acting as a fiduciary, you could receive subpar advice that ruins your investment portfolio and overall financial picture. Ensure your adviser is a fiduciary, meaning they have a legal requirement to act in your best interest, or seek out someone who is.

Next: How advisers get paid could be cause for alarm.

3. You absolutely need this product

businessman giving presentation

Be wary of advisers who just push products. |

Aggressively pushing products could suggest your financial planner is really just in it for the extra cash. Typically, financial advisers get paid in one of two ways: fee-only or commission-based. Fee-only advisers earn money solely from the clients they take, whereas commission-based advisers receive a kickback from the products they successfully sell you.

Some suggest fee-based advisers are more objective with their clients, but it would be unfair to classify all advisers the same. Take note: If your planner is continually pushing products, such as whole life insurance or mutual funds, then their primary objective could be to make the most money with commission from their recommendations to you.

Next: Doctors aren’t the only ones with specialties.

4. They lie about their specialty

donald trump and michael dell

Make sure your adviser specializes in your area of need. | Chip Somodevilla/Getty Images

Some professionals might be apt to assure you they excel in your specific area of need, when in reality they do not. Historically, financial planners have been labeled “generalists,” but as the times changed the need arose for specialized sectors. Find someone who has an inordinate focus on one part of your finances to help ensure sound advice. For example, someone with experience in investment strategies might not offer the same expertise as someone with a background in life insurance, college planning, or families with children with disabilities. Make sure you clarify your adviser’s background before you sign on the line.

Next: Look out for hidden fees.

5. There are no fees

Candid picture of a female boss and business team collaborating

Are they being honest about hidden fees? |

Any sales person will verify that commissions are often their biggest motivating factor for securing new business. But sometimes, the only person benefiting from the products they’re selling is the one making money from the transaction. If an adviser claims there’s no commission involved, it’s definitely cause for concern. When was the last time you did anything for free? Exactly. Take a close look at the contract documents you’re asked to sign. Even if their services seem to be fee-free, there really is no such thing.

Next: Some advisers love to use fear tactics to drive business.

6. The time to act is right now!

Young businessman with a briefcase and glasses running

Not everything is do or die. |

The do-or-die fear tactic is common with shady advisers. Look, we all understand investing in the future is imperative. But so is drinking water and eating food to stay alive. It’s highly unlikely that you’ll live on the streets or ruin your children’s college dreams if you take a moment to consider all investment options. Bad agents will push clients just to make a sale, so if you’re feeling coerced in your decision-making, you probably have the wrong adviser in your corner.

Next: Sometimes, financial advisers lie by inflating numbers.

7. Your return on investment will be huge

Businessman Giving check

Inflated numbers are misleading. |

Predicting future returns depends solely on the average rate of return historically. So it’s easy for some advisers simply to exaggerate your potential success by using compound interest to estimate your return. For example, stating that an investment of “$X over Y years will yield $Z with an average return of A%” would be inaccurate, as no one can predict the future. Be wary of advisers who attempt to inflate numbers in this way.

Next: What really qualifies as low risk?

8. There is no risk

Piggy bank on buoy floating, risk

No-risk investments do not exist. |

No-risk investments do not exist — except for maybe in CDs or savings accounts — but those strategies don’t usually require assistance anyway. A shady financial adviser might claim there is no risk to their proposed plan of action, but that would be false. A trustworthy professional, on the other hand, might urge passive investors to consider safe, low-risk strategies.

Next: How to tell if your adviser truly knows you

9. You are my primary concern

Michelle Money and man giving attention

You are not their only client. | ABC

To figure out whether a financial planner is preparing to take you to the cleaners, pay close attention to your first meeting together. Every professional will claim you and your success is what matters most. But actions speak louder than words in this case. If they go on and on about what they can do for you and why they’re your best bet, they’re likely a bad adviser.

These types of promises can’t be made in truth unless the adviser understands your unique situation. The real advisers will ask questions designed to help them learn personal aspects such as who you are, what you care about, insight into your current financial situation, and where you’d like to be both now and in the future.

Next: The tricky truth about passive investing

10. Passive investments require less upkeep

irresponsible financial planner

Even the smallest portfolios require upkeep. |

Passive investing is a strategy some people adhere to. But as financial planners Brian Preston and Bo Hanson tell U.S. News, “The financial landscape is constantly evolving, and even passive investors need to pay attention to what is going on. Portfolio monitoring, rebalancing and investment review are all parts of a sound investment management process.”

Remember, stocks that were valuable in the year 2000 might not be worth holding on to now, and it takes work to remain afloat. Advisers who “set it and forget it” are doing you a disservice by not actively meeting your long-term investment needs.

Next: You’ll likely lose money.

11. We won’t lose any of your money

Money, Hiding money, theft, steal

It’s likely you’ll lose at least a little bit of money. | Paramount Pictures

A statement such as this is just downright propaganda. Any true investor knows you’ve got to spend to make money, and you’ve got to risk it to get the biscuit (within reason, of course). You might diversify your portfolio using the stock market or real estate market, both of which are industries that have seen a lot of ups and downs historically. Nearly 70% of investors lost money in 2015 alone. So any financial adviser who guarantees you 100% success throughout your planning years is absolutely lying.

Next: How to tell the wolf in sheep’s clothing

12. I’m a real financial adviser

convincing someone of your credentials

Watch out for financial frauds. | FX

This might seem puzzling, but remember anyone in the financial industry can call themselves a “financial adviser” regardless of their training. Before you give them the keys to your life savings make sure they’re being truthful about their relevant training and education. Anyone without a Chartered Financial Analyst credential, Certified Financial Planner or Registered Investment Adviser licensure might be shady.  Unfortunately, it’s mostly up to you to detect the potential frauds, as even the most disguised professionals exude honesty and confidence.

Next: There’s distrust in the industry.

13. People trust me with their money

woman having interview

Consumer trust in advisers is low. |

The Certified Financial Planner Board of Standards survey found 70% think financial advisers should be regulated to protect investors and build consumer confidence in financial services. What’s more is 63% believe current laws do not protect consumers from those who would take advantage of them, and 44% say Congress and regulators have done little to protect consumers.

Like real estate agents, there’s not necessarily a college major one can declare to become a financial professional. The CFP certification is the closest thing to a professional designation. Although this is the most comprehensive and well-known — it does adhere to an ethics code and require completion of an approved curriculum — it’s not perfect. And anyone can abuse such powers.

Next: The generation most susceptible to lies

14. It’s worth the risk


Not every risk is worth it. |

The best financial advisers cater to their client’s needs before their own. Older clients might hesitate to take recommended risks as they near their retirement years, and instead they are looking for ways to lower their risk profiles. The older generation is more susceptible to fraud in all forms and apt to take more risk than their situation warrants, research suggests. Be wary of advisers who urge risky moves, such as mortgaging a home that’s already paid off to fund further investments, once you’ve already paid off debts or downsized your home in preparation for retirement. These are moves you don’t need to make.

Next: “I’ve got insider information for your ears only.”

15. Invest in this ‘hot tip’

telling secrets

Some financial advice is just noise. | George Marks/Retrofile/Getty Images

Sometimes the biggest source of falsehood comes from the noise and waves of bad advice you would’ve been better off ignoring. Any time someone wants you to invest in an intriguing venture, an up-and-coming start-up, or a hot stock tip, you might want to do due diligence before going all in. Yes, you could strike it rich and see worthwhile returns, but you could also wind up spending years trying to recoup your losses. An adviser with little experience could be relying on friends, colleagues, or the news to find opportunities. So these types of statements should be taken with a grain of salt. Remember, if it sounds too good to be true, it probably is.

Follow Lauren on Twitter @la_hamer.

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