Good advice isn’t free

I wish people would get over the desire to get something for nothing just because the something you’re getting was created, produced, written, invented, or provided by an independently wealthy organization or person. When you get stuff for “free,” you’re deluding yourself into thinking you beat the system. Chances are you didn’t. The system probably beat you and you just don’t know it.

Whether it’s the free t-shirt that comes with the credit card application you filled out, the free TV that comes with your brand new buy-now-pay-later couch, you’re paying for it somehow.

But nowhere is this more apparent than in the financial services arena. People waltz into a company where the advice is “free” without giving two thoughts to how the person giving the advice buys food for their baby’s belly.

You know that mutual fund salesperson? Sure, you don’t have to fork over dollars directly for his advice, but you’re paying anyway. It’s wrapped up in the commission or the management costs. And as for credit counsellors, they’re paid by credit card companies. (Doesn’t that seem weird to you?) And your mortgage broker? She gets a commission from the lender, which varies from 0.5% to 1.2% of the mortgage, depending on the type of mortgage you get.

Maybe it’s time to take off the rose-coloured glasses and look at “free” for what it really is: a trick. A way to make you feel that you’re getting something for nothing so you don’t look too closely at the something you’re getting.

Hey, if that t-shirt you got when you filled out the credit card application shrinks after two washes, what’s the big deal, it was free, right? And if you walk out of credit counselling with a ruined credit history and the propensity to go right back into debt–that’s the reality for so many folks–hey, at least you didn’t have to pay.

There are good credit counsellors, good mortgage brokers and good investment advisers out there in the marketplace. But it’s a mistake to think what they do is free. If that’s how it’s positioned to you, know that it’s a lie. You’re paying. The only way to be sure you’re dealing with someone reputable is if they answer the question, “So, how are you compensated?” without waffling.

Like all products and services, advice has a cost. Know the cost and you can make a smart buying decision. Delude yourself into think it’s free and you’ve been had.