Do you really know who you are taking your financial advice from?

Opinions are like assholes - everybody has one.  That adage may be a bit rough, but it is tough to argue with - even if those opinions are disguised as so-called "financial advice".  Opinions are everywhere and always will be.  People have opinions about everything - sports, politics, finances, you name it.

Opinions do not have to be informed or genuine.  That is what makes them opinions.

Financial advice comes from all directions, even if you aren't looking for it: your dad, your stock broker, financial advisor or the presumed financial expert on CNN - or one of your local radio stations on Saturday morning.  Financial opinions are a dime-a-dozen.

And when it comes to your finances, taking advice from someone who may not have your best interest at heart, or is simply full of crap, introduces profound consequences.  It is YOUR money on the line, and someone is telling you what to do with it.  Ultimately, it is your responsibility to determine the validity of the advice and act if necessary.

Fine, Steve, I agree - but how do I know who is credible and who isn't?

Glad you asked.  I am still fairly young, but over the years I have observed a few consistent tactics used by those who generally know what they are talking about.  These people are serious about what they do and experienced enough to guide virtually anyone down the right path.

Three tactics, in fact:

1.  They value your financial position over commission earnings

Face it, if a financial expert is being paid to provide you with advice, or if commissions are involved, then there is a good chance that he has a stake in the advice that is given.  Brokers that get a commission on each trade naturally maximize their income by designing their advice around the concept of moving money around - trading.  These trades may not be in your best interest and will eat into your long term profits.

If you deal with a stock broker or financial analyst, pay special attention to how closely he or she cares about your financial standing, goals and future.  A one-size-fits-all approach usually pads the adviser's bank account more than improving the client's financial position.

If your adviser's idea of advice seems to revolve around buying and selling stock, then your adviser is probably making a commission off of each transaction.  If your stocks stay the same or increase only marginally, consider finding another adviser, or better yet, taking matters into your own hands and managing your own investment portfolio.

Note: I want to be careful not to indict every well-intentioned person in the service industry who is paid to provide advice or a service (like personal trainers, hospice workers or anyone else who has one-on-one contact with people (yes, even financial advisers)).  There are very good, dedicated and saint-like angels out there who's top priority is to take care of their clients.  Unfortunately, there are many who's priority has nothing to do with the client that they are supposedly serving, especially when big money is thrown around.

2.  They practice what they preach

Would you take weight lifting advice from a 300-pound couch potato?  How about computer advice from someone who couldn't tell the difference between a keyboard and a damn 2-by-4 piece of wood?  Yeah, me either.

Be especially critical and consider the source of any advice offered, especially by your "helpful" friends and co-workers who probably have very little experience in saving and investments.  For example, if one of your co-workers talks about retiring somewhere in his 60s, but keeps telling you to "live a little" at restaurants, then that person probably isn't the best person to take financial advice from.

Instead, find a local financial Meetup in your local city to get to know others who are keenly in tune with their finances - who live and breath this stuff.

Or, check out reputable financial web sites like Bogleheads.org, DividendMantra.com and so many others (like this one!).  In other words, maximize the quality of information by surrounding yourself with like-minded individuals who are just as focused on retiring early and enjoying a life time of happiness as you are.

3.  They ask as many questions as they answer

Good financial advice is tailored around the goals and financial standing of the person being advised.  For example, a recommended savings rate of 15% is probably not appropriate for a 25-year old who wants to retire before he or she hits 40.  And likewise, no financial expert should advise that same 25-year old person to save 50 to 60% if the client's goal is to comfortably retire by 60.

A good adviser cares about their clients.  They ask as many questions as they answer.  Determining the goals of the client is so critical to the process of sound financial management that not only is one-sized-fits-all advice inappropriate on its face, but it may actively destroy that client's future if followed without waver.

If you ask me, it's criminal.

The main problem is the intimidation factor of the typical financial adviser.  Many folks who may not be as experienced or knowledgable with investments naturally assume that the well-dressed business man behind a solid mahogany desk is the expert in the room.  It can be tough to separate good financial professionals from the rest.

Moreover, do not be easily fooled by that BMW or Porsche driver who seems to have it all.  Often, those people are saddled with so much debt that they will be working well into their 60s to maintain their lifestyle.

Keep your Porsche.  Damn it, I don't want to be working at 60!

Use the tips above to determine whether or not your financial advisers (professions, friends and family) truly have your best interest at heart.

After all, it's YOUR money.  Treat it wisely.