How to tell if your financial adviser is a Warren Buffet or Bernie Madoff clone

I've been getting quite a few cold calls lately from financial advisers looking for business. The standard sales pitch is: 'Can we meet to discuss your investments? We have some ideas that you might be interested in.'

The cold callers won't tell you over the phone what the ideas are that you might be interested in. You will have to agree to a meeting to find that out. And if you do agree to a meeting, all you are likely to get is a well-oiled presentation about why this particular adviser is ready to help you 'put your money to work' or 'grow your wealth' or something like that.

So, how should you cope with financial advice and financial advisers? The first answer to this question is that you need to recognise that the job you think the adviser is doing and the job he is actually doing are two different things.

To explain this, I want to talk about my tennis coach, Matt. Now, Matt's job is ostensibly to improve my tennis game. In some sense, this is an impossible task. I am well past my physical prime and I'm not getting any fitter. To have any serious impact on my ability to hit a small furry ball around the court, Matt would have to make me work extremely hard to overcome my physical limitations.

But he doesn't. And that's because he knows that his real job is not to improve my tennis. No, his real job is to make sure I keep coming back for more lessons. Otherwise, he doesn't get paid.

So, too, with the financial advisory business. You might think that your financial adviser's job is to give you good financial advice and help you grow your wealth. But it's not really. Just as Matt's job is really to sell tennis lessons, your financial adviser's job is really to earn advisory fees and commissions.