When I was trained as a rookie CPA candidate in the late 70’s, the term professional skepticism was first introduced to me.

What it means is that we should not accept all stories at face value. In the accounting world, it goes even further to mean that one should corroborate or validate through examination and testing as much as is needed to be sure that certain statements or positions taken on systems, processes, or financial statements are most accurate and meaningful.

This same attribute of professional skepticism should also help govern your financial decisions.  Although your source of guidance may reduce some skepticism, sometimes a long-term relationship with an investment or insurance broker merely masks the fact that you may have more appropriate alternatives; especially in light of the fiduciary focus, requiring advisors to only act in the best interests of their clients. Realize that brokers and insurance agents are not required to act as a fiduciary, and may sell you anything that is deemed suitable, even if it is the most profitable product for the seller.

The best way to practice professional skepticism is to have a natural curiosity about the recommendation. Ask as many questions as you can think of asking. Some of the more beneficial questions as it relates to your financial well-being may be simple ones such as “why is this appropriate for me”. A couple of meaningful follow up questions would include “what other products have you researched and considered appropriate for me”. And “why then did you choose the one that you did”. You may also be surprised if you ask the question about how much commission income was earned for the recommendation of this product. Don’t let them wiggle out of this one and ask for a specific answer.

I’d suggest that your antennae rise even higher when this advice comes from mass media outlets. I’m not jumping on the fake news bandwagon, but there are potential issues for advice rendered through media.

Financial advice rendered through mass media is likely very general, intended for the masses, and may or may not be applicable to your specific situation.

There are times when a client will bring an article that they’ve read to our office asking for clarification. I think that is great, it shows that they care about what is going on in the financial world and it provides greater education value when the topic is explained through the context of their own financial facts and circumstances.

If you are working with a fiduciary who always acts in your best interests, you should still ask some of the appropriate questions. Just because an advisor is a fiduciary doesn’t mean that they have all of the answers all of the time. Your double check can come from your own research or by asking other, related professionals such as your attorney or CPA. It is never a bad idea to keep asking questions until you are satisfied and understand the recommendation completely.

John P. Napolitano CFP®, CPA is CEO of Napier Financial in Braintree, MA.  Visit John P Napolitano on LinkedIn or napierfinancial.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and Napier Financial are separate entities from LPL Financial. He can be reached at 781-849-9200.


By John P. Napolitano CFP®, CPA, PFS, MST Founder & Chairman Read More