Tuesday, July 10, 2007

You Will Shoot Yourself in the Foot and Your Advisor Will Help

This isn't my first message regarding "advisors" who harm clients by thinking they know more than they do. It is probably one of the most frustrating things in my work and it doesn't have to be that way. The solution is obvious.

When dealing with Capital Gains Tax Strategies, it is safe to say that 98% of all the attorneys, tax professionals, financial planners and real estate brokers in the US are not up to speed on what is currently available or how to compare the options. This is not the problem. I wouldn't expect them to be, anymore than I would be up to debating how to file tax returns or do the legal contract language for a trust.

The problem is that when a client comes to them for help on a capital gains tax issue they hand out advice without having all the facts. And they often get paid a lot for this bad practice. That is just wrong.

I can say this definitively, because I see it happen almost every day. There is a simple solution to make sure this does not happen to you. Here it is.

When you are exploring your Capital Gains Tax options for your asset sale, be sure your advisor hears the same thing you do. They should know your financial situation. If they are in on the discussion process from the beginning, they can voice their concerns or offer what they think is a better solution. You will hear the conversations from both sides and can draw your own conclusions.

If they advise you not to do something before they bother to look at the benefits, they do not have your best interest at heart.

I do not respect any advisor who refuses to have a conversation with all parties. Period. They usually have their own agenda and it's not to help you.

Ask yourself: "Why would I trust the advice of someone who didn't offer me these options to begin with and won't take the time to discuss them if there is even a chance it will be the best strategy for me and my family?"

If their concept of how to proceed is truly best, why wouldn't they jump at the chance to show "how knowledgeable" they are and confirm why the client should take their advice?

I am always receptive to hear another professional's opinion and will yield to any better suggestion or plan that benefits my client. That new insight allows me to help future clients even more effectively.

If your other advisor doesn't think along those same lines, how exactly are they helping you? They are doing you much more harm than good, and you probably don't even realize it.

I probably sound like I'm ranting a bit, but I see too many people taken advantage of by someone they should be able to trust to act in a fiduciary capacity. It is you, the client, who suffers.

Paula Straub

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