You can pick them a mile away

Don and Sarah are a couple in their early thirties who have decided they want to get sorted, and want someone to help them. They’ve worked through the investment section on Sorted, and worked out that they are in the medium risk category of long-term savers. They’ve contacted two financial advisers to have a preliminary chat.

They go to check out the advisers. The first one immediately starts talking about how much money he has made for his clients and how most New Zealanders miss out on making big money because they are far too timid. He presents examples of investments he has recommended which have all made average returns of over 15% after tax, some considerably more. The preliminary meeting concludes with the adviser saying – “if you want to really make your money work for you, come back and see me next week. I'm putting together a syndicate of investors in a really good deal, but it's only open for another week”. He says he will get a 6% commission on the investment, but that wouldn’t matter because the investment returns would be high enough to leave plenty for everyone.

Don and Sarah go away feeling uncomfortable but also thinking – ‘maybe he really is a good operator, and we could be passing up a big chance to make some money’.

Then they go to see the second adviser. Immediately the feeling is different. The second adviser starts them talking about their own goals and attitudes, how they feel about taking risk and when they think they might want to use their savings. He doesn’t mention any schemes or products, but gives them a small questionnaire to complete and says that if they come back in a week he will have look at their goals and risk profile, and sorted out three or four investment approaches to discuss with them. He says he charges by the hour and had no allegiance to any particular financial institution or schemes.

As Don and Sarah look at each other on the way out, they are both smiling. They make an appointment to see the second adviser the following week, and politely decline the first guy’s high risk “get-rich-quick” scheme.