Is your Investment Professional Cross-selling Investment Products?

Cross-selling has become a popular strategy for investment professionals. When done properly, it can benefit both the client and the investment professional.

But before making any investment decision, it’s important to understand what you are agreeing to. This guide will help you better understand what cross-selling is and what to consider if you’re presented with a cross-selling offer.

What is Cross-selling?

Cross-selling is a technique used to sell more products related to the one you have already agreed to purchase. For example, you decide to purchase a burger at a restaurant and the clerk asks if you’d like to add fries and a drink to your order. Similarly, in the financial services industry you may be offered additional investment products.

Cross-selling is often confused with upselling, where you are encouraged to buy an upgraded, more expensive version of the product you already want. Cross-selling is about adding more products, not increasing the value of one item. 

A Potential Win-win:

In many cases, cross-selling brings value to both you and your investment professional. By offering you an investment product in addition to what you were initially looking for, the investment professional may improve your return while simultaneously increasing the firm’s revenue. This could look like a salesperson offering to sell you light bulbs to go along with a new lamp you’re purchasing. You would still get the product you wanted, plus the lightbulbs, and the business increases its revenue. 

Before agreeing to invest in additional products, be sure to ask yourself if you really need or want the extra investment. While cross-selling can be beneficial to both parties, you can still end up paying more in fees than you originally planned. 

Always Check Registration: 

In New Brunswick, all investment professionals must be registered with the Commission. Registered investment professionals are required to recommend suitable investments based on the information you’ve provided. They are not allowed to cross-sell inappropriate products or ones they’re not licensed to provide.

While registration is an important layer of protection, it’s important to understand that just because a product is suitable for you, it doesn’t always mean it makes financial sense for you to purchase it. This is a determination that you would have to make for yourself based on your own financial needs, goals and situation. 

For more information on where to check registration, click here. 

Look out for Red Flags: 

As with any investment, it’s important to watch out for red flags of fraud. Things like aggressive language that pressures you to act immediately or promises of “guaranteed returns” or “no risk” are signs that you should take a step back and reconsider. Aggressive selling tactics put pressure on you to purchase something without fully understanding what you are agreeing to. 

Registered investment professionals should always present you with an agreement in writing. If your deal has no paperwork or the papers are poorly presented, it may also be a sign of a potential scam. All investments come with some risk. If you ever feel pressured to make an investment, it’s worth getting a second opinion before handing over any money. 

How to Protect Yourself: 

Be sure that the individual you are purchasing investment products from is registered in New Brunswick. Check that your financial advisor is registered using the National Registration Search. 

Always ask questions. Registered investment professionals will be happy to answer your questions and allow you the time to think before making any decisions. You can also get a second opinion from third party advisors who have no connection to the investment. 

The bottom line is that cross-selling can be a good thing for both parties, but as with any investment, it is always best to do research and check registration of your financial advisor and firm before handing over your hard-earned money.