I am seeing too many examples of professional qualifications being hacked and abused by questionable business models and marketing. Is your adviser actually qualified or not? You need to look through the marketing spin and determine whether the person giving you advice actually has the qualifications and experience to do so. Here are 4 recent examples I’ve personally come across:
Tax Advice: I’ve seen a recent trend of tax agents appearing to lend their qualifications to others on the front line. In one particular example, a tax agent (based in one state) was looking to recruit unqualified employees/contractors in other states to give tax advice in their local areas and prepare tax returns using the head office’s tax agent registration. In fact the website boasts that no experience is required. Of course there is the reassurance that experts at head office will review every tax return before it is lodged, but being a tax agent myself I know that tax agents need to spend more time providing tax advice during the year than actually spent preparing tax returns. It is illegal to provide tax advice of any kind without being registered or closely supervised. I wonder whether the end user thinks the person they are talking to is probably not legally qualified to give advice?
Business Valuations: A while ago I was approached by a software vendor who had built a program that automatically prepared business valuations. Any (honest) qualified business valuer will tell you that automation in any business valuation process is dangerous and almost certainly negligent. The boast from the software company was that the software was so easy to use that your receptionist can prepare your business valuations with no experience and you charge your clients $5,000 or more and they will never know. Do I need to say more about
this? To put it in perspective, at the time of writing this post I have prepared 95 independent written business valuations in the past couple of years and every one of them required professional judgement of the type that can’t be automated.
Business Brokers: I was perusing the website of a national business broker group that were looking for individuals to join the group and be responsible for business sales in
entire regions. The website boasted that no experience was necessary. This more than slightly contradicted the marketing on other pages of the website that boasted the qualifications and experience of it’s individual brokers. This is the site that gave me the motivation to become a fully qualified business broker myself, which I obtained last year. To be honest I look to enter
business areas with low levels of incumbent skills or transparency as these niches can often be grown almost from integrity alone.
Financial Planning Advice: This is the never-ending pet hate of mine. Everyone is an expert on where you should spend your money. It just happens that the real
estate agent says you should invest in the property he is selling and the adviser at the major bank says their products are the only ones worth investing in. You should always seek independent advice that is not connected with the personal gain of the adviser. In one example I’ve seen a tax agent who is also a real estate agent running sexy seminars then effectively selling particular properties that were already arranged with a developer beforehand. So you have the real estate agent, tax agent and seller all advising you what to do with your money with a vested interest. Do you think that shares or managed funds will get a fair hearing in that situation?
The lesson: Don’t let others do your thinking for you. Align yourself with people who are transparent and trustworthy with true qualifications and no vested interest.
Then ask as many questions to educate yourself so that you can make your own decisions. And don’t even get me started on outsourcing cheap advice. That’s a post for another day.
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