3 Red Flags to Watch for When Receiving Financial Advice

Everyone needs advice in their life. The world can be a big and confusing place, and having good advice can go a long way in helping ensure that you make the appropriate decisions. One of the biggest areas of life that can use helpful advice is finances. How to deal with money is an issue that every adult faces in life, and getting good advice in this area can help support you for life.

That being said, getting bad financial advice can seriously affect your life in a negative way. That is why you must determine if the financial advice you receive is actually good advice or not. So, what are some red flags to watch out for when receiving financial advice? Below are some ideas on just that.


Any advisor, whether it be an investor or anyone else, who gives big promises with little risk should raise concern. An advisor, especially if they are actually investing your money, should be confident in their advice and abilities. That being said, they need to be honest about investing. Typically, big rewards may come with big risks. That means if someone is promising big things with little to no risk, it may be untrue or a “bubble” in the financial market that could burst at some point.


Another red flag that should grab your attention is a lack of transparency. This lack of transparency can be in several areas. For one, if your financial advisor is only pushing products or investments that bring them high commission, you might be dealing with a red flag. This can be a sign that your financial advisor is just a salesperson who is trying to push a product that will benefit themselves and does not have you as a priority. This lack of transparency and self-interest of your financial advisor may negatively impact your finances and can push you into inappropriate investments.


If someone is advising you financially and is actually investing and handling your money, good communication needs to be taking place. You need to be able to see and understand where your money is going and how it will actually profit you. If your financial advisor cannot explain and break down their investment strategy to you, you may have a red flag on your hands. While they may not explain every little aspect of the investment strategy to you, a good financial advisor should be able to talk about the main concepts with you and clear up any questions you may have.

Knowing how to deal with your finances and what to invest in can be intimidating. Sometimes, getting financial advice and help can be a great way to increase your finances. That being said, you should be careful with who you listen to and allow to handle your money. The red flags listed above might enable you to avoid trusting the wrong people with your finances.

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