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Be wary of financial planners who only recommend in-house funds vs the fiduciary financial advisor approach.

Updated: May 16

This occurrence is likely to be higher among financial advisors whom large financial institutions, such as banks and superannuation funds, employ. These institutions typically offer their own in-house funds to their clients.

Some risks associated with your financial advisor using in-house funds include:

o Conflicts of interest. There is a potential conflict of interest when a financial advisor uses in-house funds, as they may be motivated to recommend these funds to their clients even if they are not the best products for their needs.

o Investment performance. In-house funds may not perform as well as third-party funds.

o Fees. In-house funds may have higher fees than third-party funds.

o Limited choice. If your financial advisor only uses in-house funds, you will have a limited range of products to choose from.

Tips for protecting yourself when investing with a financial advisor:

o Ask your financial advisor if they are a fiduciary. A fiduciary advisor is legally obligated to act in your best interests.

o Ask about your financial advisor's fees and how you will pay them.

o Ask your financial advisor to explain their investment strategy and why they recommend a particular in-house fund and compare it to similar third-party funds.

Remember, financial advisors must act in the best interests of their clients at all times. They must recommend products and services suitable for the client's needs and circumstances, even if those products and services are not in-house.

Email me if you want to know more about our evidence-based investment strategy and how we operate as your fiduciary financial advisor. We also have an investment strategy template available which may help you decide what investment approach you are looking for.


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