There's No Shame in Being Skeptical

No one likes to think of themselves as paranoid, but we're often more comfortable with being called "skeptical."  In finance, though, skepticism is basically just a healthy dose of paranoia.  This is nothing to be ashamed of; in fact, it is your common sense kicking into play.  In the world of finance and investing, there are plenty of people who are out to get you, so paranoia isn't entirely out of place.

Skepticism Can Be Common Sense

When it comes to investing, you need to keep your common sense close by.  Being skeptical of “the next big deal” is always healthy.  Like the saying goes, “If it’s too good to be true, it probably is.”  The same is true regarding tips from your broker and adviser as well.  Always look that gift horse in the mouth.

My brain operates around horses.  Let me give you a quick metaphor that’s coming to mind:  You’ve learned to trust your horse, and as a reward, sometimes you let him pick the heading of the outing.  Generally, it turns out to be a good experience for both of you.  Then comes the day they see a nice lush field of alfalfa and you’ve let them have the lead one too many times.

Some financial advisers are the same way.  They may know that running under the tree is no good for you, but they see the green pasture on the other side for them, and off they go.  Except when it comes to these individuals, we’re talking about fresh, new products rather than flora and fauna.

You might be saying to yourself, “Not my horse adviser.  He would never lead me in a bad direction.” But you have to remember one thing...

It’s Your Money; You’re the Boss.

The truth of the matter is that financial planners get paid in basically five ways:  salary, fee only, asset-based, fee-based, and commission only. It's a good idea to have an idea of how your advisers are paid. You have to make sure that their interests are aligned with yours.

Also, women especially feel guilty if we doubt those who are supposed to be taking care of us.  Don’t feel bad for second-guessing your financial adviser.  At the end of the day, it is your money.  They may be managing how it works for you, but remember that they work for you, too. 

Financial advisers and stock brokers provide a service to make money, so they’re going to be trying to make it.  Never let yourself lose sight of that reality. Regardless of how they're paid, it's good to have a level of healthy of paranoia when someone else is managing how you handle your money.  Some of those products are genuinely helpful to your financial growth, but if they seem too good to be true, they very well may be.

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