Do You Need a New Financial Advisor?


Do You Need a New Financial Advisor?

Choosing the right advisor is one of the most important financial decisions you will make. But, how do you know you have the right one? If you have experienced any of these red flags, it may be a sign that you need to find a new financial advisor.

5 Signs You Need a New Financial Advisor

1. They don’t have good communication with you.

I can certainly understand and appreciate that everyone gets busy. But when you are paying for someone’s professional services, they should be able to maintain good communication with you.

However, if they demonstrate any of these behaviors, it may be time to look elsewhere:

    • They are unresponsive to your calls or emails.
    • It takes them weeks to get back to you.
    • There is no effort to check in with you throughout the year.

Communication is crucial in any relationship, but even more so when planning for your future.

2. They are inattentive to your portfolio.

Even if you aren’t their biggest client, it is still your financial advisor’s responsibility to know what’s going on in your portfolio. They should be aware of major changes and communicate them to you in a timely manner. This means that you shouldn’t have to find out weeks or months after the fact.

If you’re unhappy with their level of attention or the overall performance of your portfolio, you may have better outcomes by finding someone who is more in tune with your investing strategies.

3. Their fees are high.

Fees will vary greatly between different companies and advisors. Although, there are some general guidelines that can help you determine if you are paying too much. Ideally, you want to pay less than 1% of your AUM (assets under management). In terms of flat fees, this can range from $1,000 – $5,000 annually or $100 – $400 an hour.

If you are paying more than this, compare their fees with other advisors in your area. More hands-on investors may also consider using a robo-advisor. Many make the switch because they come with much lower management fees than their human counterparts.

4. They pressure you into certain investments.

One of the first questions I ask is if the advisor is fiduciary, meaning that they have a legal obligation to act in your best interests. This is important to me since some offer fee-only or commission-based services which can influence the advice they give.

Advisors working on commission earn more when they sell certain products, so they may try to push you toward them. In some cases, it may not be the best financial product for your portfolio. Therefore, I prefer to go with fee-only advisors since they usually help you get the most from your investments.

5. You don’t have a good rapport.

Your relationship with your financial advisor is an important one. In essence, you are trusting them with your life savings and future security. So, it makes sense that you want to feel like they have your best interests in mind and that you can comfortably discuss any financial topic.

Therefore, rapport is another important aspect of this relationship. And this is built upon mutual respect. If they talk down to you, make you feel unimportant, or don’t listen to your wants and needs, then it’s a good sign that you need a new financial advisor.

You want someone you can trust and who incorporates your needs into the larger financial plan. But if your advisor is costing you money or making things more difficult, it’s a good indication that it’s time to move on to greener pastures. If you aren’t sure where to begin, the National Association of Personal Financial Advisors site can help you find other advisors near you who may be a better fit to help you reach your long-term goals.

Read More

Leave a Comment