In a recent report it has been suggested that many women are very skeptical about information given to them by financial advisors, with many not trusting the advice that these financial professionals give to them. A recent survey showed that more than 90 percent of female respondents felt that financial advice companies tended to focus more on trying to sell them financial products and services than providing them with sound advice.
Some believe that those who took part in the survey may be right to some degree following a German report that was released last year by the Max Planck Institute for Social Law and Social Policy. This report showed that in cases where financial experts had a conflict of interests – for instance, if they made money from selling certain products and services – they tended to give bad advice to clients that did not have financial know-how. One official involved in this report said that clients that seemed more knowledgeable when it came to finances appeared to be getting better advice from financial professionals than those who had little or no knowledge.
Lower financial literacy
One of the authors involved with the report went on to state that on a global basis, women tended to have a lower level of financial literacy than men. She said that this meant that women were receiving bad advice from advisors far more regularly than their male counterparts. She concluded that women and those who were not particularly well educated were therefore most at risk of receiving poor advice that was not in their best interests if they contacted a financial advisor.
Experts have said that there are financial advisors around who do focus on the best interests of their clients but there are others who are only providing recommendations on select investments – those that garner higher fees for the advisor or their company but can result in worse performance and higher fees for the client. New rules are already being readied by the Labor Department that would mean financial advisors have to act in the interests of their client – a rule that is being supported by organizations such as the Consumer Federation of America.
One economist went on to state that something as simply as a bonus or increased commission for selling certain financial products and services could quickly turn some advisors into sales people with their own financial interests at heart rather than those of their customers.