RULE 52: If You Are Going To Get Financial Advice, Pay For It

Babatunde Raji Fashola, Ex-Lagos Governor turned Minister of Works, Housing & Powe

Boy are there a
lot of people out there waiting and wanting to give you financial help, advice,
information, tips and guidance. Great – learn early on to be very careful who
you take advice from if you want to hang on to your wealth.


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There are two
groups of people to whom you may turn in the event of needing said advice,
help, and guidance, whatever. First, there are skilled professionals who carry
indemnity insurance so you can sue them – and expect to get a payout – in the
unlikely event the information they give you is erroneous, wrong, or
dangerously bad. If they stand by their advice, you should make sure provision
is there so that you get paid if it is wrong. That keeps ‘em on their toes.
These people you pay and their fee entitles them to talk to you about your
money. 
“Listen to them unless they won their money on the
lottery, inherited it, robbed a bank to get it or bought a load of drugs in Marrakech and sold them in the local
nightclub”

Second, there
are very rich people. Listen to them unless they won their money on the
lottery, inherited it, robbed a bank to get it or bought a load of drugs in Marrakech and sold them in the local
nightclub (actually their entrepreneurial skills might be worth something even
if their honesty or honor isn’t).
Those are the
only two categories open to you. The ones closed to you include: friends and
family, well meaning acquaintances (even if they do have a quid or two of their
own), TV programmes, the Internet and high street banks.
You must make
sure any financial advice comes from someone who carries a recognizable
qualification or membership of a suitable organization – that includes the
very, very rich club. Make sure you know that they know what they are doing.
The textile millionaire Joe Hyman
used to say that in order of honesty, the three types of bank were (1) high
street banks (2) mountebanks and (3) merchant banks.
There are two
types of advisers in my experience: (a) those who stop you from making an ass
of yourself and (b) those who tell you you’ve made an ass of yourself after
you’ve done it. You want category (a). You’ll get loads and loads in category
(b). When it comes to professional financial advisers, there are another two
categories: (a) those who deal with your finances and (b) those who try to sell
you products. Avoid (b) like the plague.
Any financial
adviser you use should be independent – i.e. they should not be restricted to
providing advice from a limited range of products offered by the company he
works for – it’s the difference between buying a suit off the peg – a best fit
– or buying something tailor-made to fit your requirements precisely.
You should also
insist on paying for the advice by means of an agreed fee – not by commission
on the policies you take out or the products or investments they sell you. It’s
tempting to go down the commission route as it sounds like you get better value
(the financial adviser gets paid by the companies whose policies
Or investments he sells you). It may sound like
better value (great – somebody else pays the adviser for you) but it may not be
better advice. You want impartial advice that is exactly tailored to your
circumstances and paying for the advice is the only way to be sure you get it,
and you don’t get sold a lot of policies or investments from companies that pay
the best commission.
From The Book; The Rules of Wealth by
Richard Templar
(Read Rule
53
of Rule of Wealth tomorrow on Asabeafrika)

Read-to-Wealth Series




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