When independent advice isn’t totally independent
The two most common reasons people seek independent advice are to gain an understanding over something they don’t understand, or, to clarify a situation.
Whichever it is, it’s fair to say that when seeking independent advice, it’s assumed that the advice is given in the proper manner – independently and without bias.
Sadly, this is not always the case.
It’s not uncommon for relationships to exist between different service providers. Typically, financial benefits accrue through referral fees and commissions. As a result, what appears to be independent advice may not be so neutral. That’s because, built into the advice may be a referral to another party from whom the advisor gains a direct benefit should the referral be followed through.
When seeking advice, one of the key questions to ask is whether there are any benefits of any kind the advisor receives from a third party. Two warning signs that the advice may not be as independent as it should are:
- The advisor is insistent in their recommendation of using a third party’s services or products, and
- The fee they’re charging is too competitive, even much lower than you may have been quoted by another advisor.
The adage of ‘you get what you pay for’ rings true when it comes to dealing with advisors.
It’s important to note that good advisors are usually not cheap. Good advisors who provide independent advice do so without any form of kick-back or benefit derived from their advice. Be they lawyers, bankers or business brokers, trusted advisors work in their client’s best interest, providing information which is truly unbiased and reliable.
Ultimately the best advice comes from a source which has your best interests in mind – and not their own interests.
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