‘Most folks should seek out fee-based financial advisors’: Worried my co-workers are being led astray by a commission-based advisor selling life insurance. How do I protect them?

Hi Money Minder,

So, here’s the deal. I taught a little personal finance class to my co-workers, and now they want more. One of them invited her father-in-law, who’s a financial advisor, to talk about investments. The catch? He’s big on government bonds and life insurance, and he works on commission, not fees. Sounds a bit like an MLM scheme, right?

I don’t want to rain on their parade, but everything I’ve learned says fee-based advisors are the way to go. Should I be worried that they’re getting roped into something shady? I don’t want all my budgeting and debt payoff advice to go to waste, you know?

Hit me up with your thoughts!

Later, [Made Up Name]

Response from THE MONEY MINDER:

Hello There,

It’s great to hear that you’ve taken the initiative to educate your co-workers on personal finance basics. It’s always beneficial to share knowledge and empower others to make informed financial decisions. Regarding your co-worker’s father-in-law offering to teach about investments, it’s understandable to be cautious given the information provided. Government bonds can be a stable investment option, but it’s essential to consider diversification and individual financial goals when choosing investments.

When it comes to financial advisors, seeking fee-based advisors is generally recommended to avoid any conflicts of interest that could arise from commission-based compensation. Offering free financial advice, especially if followed by a sales pitch for life insurance, can sometimes be a red flag for potential MLM involvement. While not all advisors who sell insurance work for MLMs, it’s crucial to ensure transparency and fully understand the advisor’s incentives.

In this situation, it might be helpful to encourage your co-workers to ask questions during the session with an open mind and do some background research on the father-in-law’s credentials and professional affiliations. It could also be beneficial to remind them of the importance of conducting due diligence before making any financial decisions and seeking a second opinion from a fee-based advisor if needed.

Ultimately, providing a platform for learning and discussion is a positive step in enhancing financial literacy. Encouraging critical thinking and informed decision-making will empower your co-workers to navigate potential financial opportunities with confidence. If you have any further concerns or questions, feel free to reach out for more guidance.

THE MONEY MINDER