How To Find Financial Advice You Can Trust

Learn 12 Essential Questions That Can Separate Good Financial Advice From Bad

How can you tell the difference between false prophets and legitimate financial advice? How do you know if the financial expert sitting across the desk can really help? Is his primary interest to pad your pockets or his own?

How do you find financial advice you can trust?

Below are twelve questions to consider before placing your trust in anyone holding themselves out as a financial mentor, advisor, money manager, expert, or guru. This list results from a lifelong career as both an investment advisor and financial educator. It is a common sense, insider’s guide to financial advice so that you get what you pay for and don’t get ripped off.

Is The Financial Advisor Already Doing Exactly What He Advises You To Do?

The advisor must have a successful track record practicing exactly what he preaches. Nothing less will suffice. What that means is:

(1)      Don’t get your investment advice from someone who built his wealth through marketing investment advice instead of actually investing (true for many big-name financial gurus, money managers, brokers, and advisors).

(2)      Don’t get your investment advice from someone whose primary function is to sell investment products (stocks, bonds, mutual funds, etc.) because it is an inherent conflict of interest that biases the advice you receive (true for most stock brokers and financial planners). Instead, separate the investment planning function from the investment product sales function and pay for each separately.

(3)      Don’t get your financial advice from academics with lots of fascinating theories but little real world experience creating risk-adjusted returns because real world practicalities differ from theoretical assumptions.

(4)      Don’t get your financial advice from authors and writers who are paid to write – not invest – because their skills and experience are in writing – not investing.

(5)      Don’t get your stock investment advice from someone who built his wealth in real estate or business because success in one field doesn’t necessary equate to success in a related but different field. The critical issues to success in each field are subtly but significantly different.

(6)      And last, but not least, never accept financial advice from anyone who is not already financially successful because they lack one necessary qualification – proven results. That includes your Uncle Bill, parents, friends, co-workers and anyone else you know who has an opinion (doesn’t everyone?) but no results proving the quality of that opinion.

In short, only learn from those experts who have “walked the talk” before you and can speak from personal experience with integrity. There are many self-proclaimed gurus out there, but few have gotten muddy in the trenches at the school of hard knocks and emerged with enviable results and valuable lessons to share. This makes their financial advice questionable, and you would be better served to move on to someone who can speak from actual experience doing exactly what they are teaching.

Is The Financial Advisor Still “Walking the Talk”, Or Is He Just “Marketing the Talk?”

When I became a real estate investor I sought out experts to teach me a wide variety of investment strategies including foreclosures and tax lien investing. What I learned surprised me…

Many of the big name gurus no longer practiced what they preached. They did the tax lien or foreclosure business years earlier and switched to selling instructional courses about their experience once market conditions changed. The fact was they no longer invested according to what they were teaching.

“The best way to succeed in life is to act on the advice we give to others.”


“Walking the talk” means doing to themselves exactly what they recommend you do. If they recommend you invest a certain way then find out if they do the same thing with their own money. Always act cautiously when someone is pitching an investment if their money isn’t at risk exactly like yours will be.

The fact that my tax lien and foreclosure teachers weren’t investing in tax liens or foreclosures at the time was important information. It raised a red flag and motivated greater due diligence. After a little more digging I learned the reasons why and it saved me a lot of wasted time and money.

Anytime someone is selling you an investment or educating you on an investment strategy find out what they are doing with their own money. You should be concerned whenever someone is not investing identical to their own advice. The one exception to this rule would be when the advisor’s financial goals and needs are so different from the student’s that different strategies for each party are appropriate.

Will The Advisor Show You Actual Proof That His Financial Advice Works?

If they are successful then they should have verifiable results to back it up. If they won’t show you, then you have to wonder what they are trying to hide.

For example, I have an extensive list of client testimonials for my coaching services, newsletter, and educational products providing independent testimony to their results and value. In addition, I provide references of past and present clients to those prospective students who are seriously considering a coaching and mentoring relationship and want to verify the quality of services.

“Advice is judged by results, not by intentions.”


The real proof, however, is in my actual financial results. I have more than $1 dollar in liquid net worth for every dollar I have ever earned in my lifetime as verified by Social Security Administration documentation. Very few people can pass this test. Do you have more money sitting in investment accounts than you have earned over your lifetime?

The only way your liquid net worth can exceed your lifetime earnings (placing a zero value on your home and business assets) is if you inherited a lot of money or you are pretty good at managing your personal finances and investments.

Results speak the truth – accept nothing less.

What Is The Financial Advisor’s Background, Education, Training, Skills, and Experience?

Not all financial advice is created equal. A hedge fund manager who has completed many years of independent research with twenty years of real time trading experience will provide advice from a higher quality experience base than a business school graduate trained in product sales by a brokerage firm. Learn from the best and accept nothing less.

The sad reality is many financial advisors are trained by their parent company to tow the party line. Few financial advisors have completed any independent research to formulate their own opinions. Their knowledge is often limited to official policy, traditional practices, and company dogma. The result is they speak the company doctrine as if it were true because that is all they know. They aren’t bad people: they just don’t know enough to know what they don’t know. The net effect to you is bad financial advice.

You can’t understand a person’s financial advice until you know the shoes he is standing in. His experience and training colors his advice. There are several levels of knowledge in the financial advice business, and the unfortunate reality is the bulk of retail financial advice comes from the ground floor level. You want top floor financial advice.

For a complete listing of resources to investigate the background and experience of your investment broker or financial advisor please see the related articles in this site under “investment due diligence” and “investment fraud prevention“.

Has The Financial Advice Been Tested Through Multiple Market Cycles?

Building and preserving wealth requires a full-cycle perspective. You must not only make money during rising markets but you must also preserve that wealth and control losses during declining markets. Anything less is only half of an investment strategy.

Beware of the “one-hit wonder” that gets lucky by investing in the right place at the right time then goes on to write books about his financial expertise. Don’t be misled. Just because someone loaded up on technology stocks or real estate before a bull market handed him sudden wealth doesn’t mean he knows anything about how to preserve that wealth during the next down cycle or even how to grow it in future market cycles.

“Never trust the advice of a man in difficulties.”


If you are not clear on the importance of this point then check out the legal and financial history behind people holding themselves out as financial experts. (See investment due diligence for additional resources.) The internet makes the process of uncovering dirt on anyone remarkably easy. You might be surprised to find out which “experts” have a history of bankruptcy, financial, and legal problems (their names are not listed here to avoid legal hassles). They might be masters at marketing and leverage who ride high on the wave of their latest endeavor, but their checkered history shows an inability to manage risk and preserve that success through a full market cycle. Just because someone is famous does not make them immune from this rule.

Make sure the financial advice you receive has been tested through inflations, deflations, bull markets, bear markets, nuclear melt-downs, Presidential assassination attempts, and anything else you can imagine. Murphy’s Law is “law” for a reason. Anything that can go wrong will – and at the worst possible time – so make sure your financial advice can manage risk for the worst outcome and profit under all reasonable assumptions.

Are You Being Told The Negative Along With The Positive?

There is no perfect investment strategy. Anyone claiming to have one is either self-deceived or a liar. You don’t understand an investment until you know all the ways you can lose money with it.

“A piece of advice always contains an implicit threat, just as a threat always contains an implicit piece of advice.”

Jose Bergamin

If the person offering you financial advice isn’t forthcoming with all the potential problems so that you can make a fully informed decision then you aren’t getting the whole picture. You need to know the risks as well as the potential rewards. Settle for nothing less.

Similarly, if your investment advisor isn’t forthcoming with his mistakes and losing experiences then he is either inexperienced or dishonest. I have made more investment mistakes than I have room to share with you here, and I’ve also made enough good decisions to have done very well over time. Every investor makes mistakes, and every financial strategy has an Achilles heal – learn them or risk being blindsided.

Does The Financial Advice Over-Simplify An Inherently Complex Subject?

Buy and hold is one of the simplest investment strategies available: you can explain how to do it in just a few paragraphs. Yet, it would take an entire book to fully understand the risk versus reward implications of this strategy in your portfolio today. Highly trained financial experts using identical data to prove their points can’t agree on even the most simplistic financial advice such as buy and hold – let alone more complex financial issues.

Be wary of financial advice that is reduced to clever sound-bites or appears to be “black and white” clear. If it is that obvious and simple then it is probably wrong or incomplete. Most financial issues, when deeply understood, are subtle shades of gray. They require a depth of understanding that leads to a well-considered decision.

“Honest advice is unpleasant to the ears.”

Chinese Proverb

When you encounter financial advice that makes the investment process sound easy just assume it is a sales technique and you won’t be far from wrong. Salespeople know the average investor is averse to complexity and wants his financial decisions handed to him neatly packaged on a silver platter. For that reason they simplify the analysis to make the decision easy for the client so they can get the sale.

Building wealth is not easy and investing properly is not simple. If it was, more people would succeed at both – yet they don’t and the statistics prove it. No matter what the gurus tell you, building wealth takes persistent work, well developed plans, diligent follow through and involves risk. I know financial advice like this won’t maximize my sales, but it gets results for those who are willing to follow it.

Is The Financial Advice Driven By Facts or Opinion?

Never confuse facts with opinions in the financial advice you receive. Opinions are useless clutter that complicates investment decisions: facts are what matters. Most financial advice blends the two together, and your job is to extract the few facts from the myriad of opinions and disregard the rest.

Examples of opinions include a forecast for the economy, what price levels a stock is expected to go to, what a company is expected to earn, or what industries should grow the best. Ignore all such nonsense because it requires an accurate forecast for the future which has been conclusively proven unreliable through multiple independent studies.

“To know the true reality of yourself, you must be aware not only of your conscious thoughts, but also of your unconscious prejudices, bias and habits.”


Facts worth knowing include current valuations and what those valuations imply about expected returns based on historical precedent. Other facts include what is actually happening now or happened in the past, as contrasted with opinions about what is expected to happen in the future. Facts are what is true and knowable right now including hard data and numbers, and opinions are about the interpretation of those facts.

Never confuse opinion with fact because it can muddle your thinking and lead to erroneous conclusions.

Is The Financial Advice A Complete Strategy Or Just A Half-Truth?

What good is a buy recommendation without clear criteria for when to sell? What good are sell criteria without a clear strategy for reinvestment?

Beware of any advisor providing a buy recommendation without simultaneously providing clear criteria that would invalidate that same advice and force a sell. Quality investment advice provides a complete process of buying, selling and reinvesting.

Even more important is that all buy, sell and hold recommendations are based on thorough historical research indicating a positive mathematical expectation. Anything less is gambling.

“If stock market experts were so expert, they would be buying stock, not selling advice.”

Norman Augustine

In short, all investment advice must be a complete process in order to be actionable, and it should be based on a proven, positive mathematical expectation in order to reliably profit and meet your investment objectives.

If your financial advice isn’t providing all the information you need to take action, or it is based on someone’s beliefs, forecasts, or hunches rather than quantitative research and historical precedent, then your financial advice is more akin to gambling than investing.

Is Risk Management A Primary Focus Or An After-Thought?

“I violated the Noah rule: predicting rain doesn’t count; building arks does.”

Warren Buffett

Risk management is what separates professional investors from amateurs. It is how your investment portfolio can earn consistent returns through a wide variety of market conditions. For that reason, I would never trust a financial advisor whose first concern wasn’t managing risk and preserving capital.

Unfortunately, most financial advice focuses on making money – the offensive half of investing – because that is what sells best. Risk management teaches you the other half of the investment game – the defensive half – by showing you how to control investment losses when adversity strikes.

A complete financial strategy requires both halves of the investment equation to earn consistent returns with a favorable risk to reward ratio: anything less is a dangerous half-truth.

How is Your Financial Advisor Compensated?

You can’t determine the validity of the financial advice you receive until you know how your advisor is compensated for providing it.

For example, magazines and other media are driven by subscription and/or advertising revenues; therefore, the publisher has an incentive to provide financial advice that maximizes those revenue streams even if it is diametrically opposed to your best interests.

Stock brokers and financial planners are often compensated by commissions and other incentives which can affect their recommendations. This is why their financial plans seldom include direct ownership of investment real estate or building a business even though these are two of the most common ways to build wealth.

“Free advice is worth half the price.”

Robert Half

You should always separate the financial advice function from the investment product sales function, and you should pay for them separately. Anything less causes a conflict of interest.

At Financial Mentor the only thing we sell is financial education to help you retire early and wealthy. We have no hidden incentives from investment product sales or advertisers to bias what we say. We never tout stocks, mutual funds or any other investments, and you should be wary of financial advice from anyone who does.

Our job is to help you understand how the financial world works and what it really takes to build wealth. When you are armed with the proper knowledge then you can take control of your financial future and make decisions that are best for you while ignoring all the biased and conflicted advice you receive from others.

Is The Financial Advice Generic Or Is It Custom Designed To Your Personal Needs?

One size doesn’t fit all. You are unique with different goals, resources, abilities and needs compared to everyone else. Does the financial advice you receive take those unique characteristics into account?

It is not enough for your financial advisor to type your personal information into a computer and have it spit out a pseudo-customized financial plan designed to gather dust on your office shelf. A computer can’t know your skills, interests, and abilities, and these very attributes are what you will be leveraging to build financial security. You need a personalized wealth plan that serves as a step-by-step blueprint on your journey to financial security.

Similarly, beware if your financial advice is coming from a one-size-fits-all seminar or generic “mentorship” program: the odds of it fitting your individual needs are very slim. The same goes with newsletters and magazines that can’t possibly provide advice specific to your personal situation. After all, how can information simultaneously provided to millions of people at the same time be personalized to your needs?

That is why I designed the Seven Steps to Seven Figures course into individual step-by-step modules. You only take those modules that are appropriate for your personal needs and don’t waste time on inappropriate or unnecessary information. You start where you want and end where you want so that you get only the information that is right for you.

Financial Mentor’s coaching system is a refreshing alternative to generic financial advice. Rather than spoon feeding you information, financial coaching empowers you to take control of your financial future. It offers accountability and support to help you stay on track with your stated goals.

Always remember that information from investment product sales people and the media should be taken with a grain of salt and a pound of caution. Never invest based solely on their financial advice without completing your own due diligence and forming your own opinion based solely on the facts provided to you.

Ask first if the financial advice you receive can pass these twelve questions before ever putting money at risk:

1: Is the advisor already successfully doing exactly what he is advising you to do?

2: Is the advisor still “walking the talk”, or is he just “marketing the talk?”

3: Will the advisor provide documented proof that his advice works?

4: What is the advisor’s background, education, training, skills, and experience?

5: Has the advice been tested and proven successful through multiple market cycles?

6: Does the advice provide a balanced viewpoint with both positive and negative attributes or is it a one-sided sales job?

7: Does the advice over-simplify the inherently complex nature of investing in an effort to make the sale?

8: Is the advice based strictly on facts or does it include meaningless opinions?

9: Is the advice a complete investment process or a half-truth?

10: Does the advice focus primarily on risk management and capital preservation?

11: How is the advisor compensated? What are his conflicts of interest?

12: Is the advice personalized to your needs or is it generic?

Financial coaching can teach you how to manage all the confusion surrounding the conflicting and contradictory financial advice you receive so that you can make well educated decisions that are appropriate for your unique path to wealth and independence. You must learn how to sort good financial advice from bad so that you can make smarter, more profitable investment decisions yourself. I hope this helps.

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