When to Break Up With Your Financial Advisor Part 1

Some professional relationships aren’t meant to last. When it comes to your financial planning professional, you’ve probably heard of the usual “red flags” of when to move onto someone else. There are quite a few other ones that we rarely see and wanted to bring attention to, outside of the normal “their fees were too high”, or “they didn’t communicate with me enough” (though those are certainly good reasons to start hunting for a new one!). Whether you’ve been with your financial advisor for many years or you’re not sure about the one you just hired, here are 3 reasons to “break up” with your planning professional. 

Reason 1: Completely “Out of Whack” Portfolio Performance

We’re not just talking about poor portfolio performance. Even the best advisor doesn’t have a crystal ball and can see the future, or control volatile markets, etc. Losses happen. Thus, if your portfolio is all over the place, up or down, your current advisor could be taking on way too much risk. Your planner should both know your risk tolerance and also be able to clearly explain benchmarks for your portfolio’s performance and any action he/she takes and why. 

If this is happening, or worse yet, they add a new investment without even telling you, then sound the alarm! That’s a really big deal. 

Though it’s normal for your advisor to make alterations on your portfolio to maximize growth potential or minimize damage from good ol’ market volatility, those actions need to be done with your knowledge. 

Reason 2: Not Staying Current

This applies in two ways. The first, ask yourself if your advisor has a certain inflexibility whenever changes in your life occur and doesn’t make new recommendations based on them. If you’ve made suggestions about what you’d like to change or if you have questions whenever something big and new happens in your life, but you feel like you’re not being listened to, then that’s a big problem. 

A really good financial advisor is proactive and hopefully has a good enough relationship with you to know when huge life changes are about to occur. They should meet you with an amended plan to reflect those changes. If they’re not even doing that, but then also ignoring any suggestions you have, it’s time to walk away. 

The second, ask yourself if your advisor is willing to keep up with new developments in the financial planning industry. For example, we have taken an active interest in attending conferences that teach about the ever-evolving internet scams so that we can educate our clients how to stay the safest with their money online. 

It’s one thing for an advisor to be very confident in their approach with an excellent methodology for managing their clients portfolio’s. It’s another to be completely closed off to any and all evolutions in the industry that could make things better. If your current advisor has shown zero interest in knowing the latest industry trends (or worse, isn’t even willing to talk to you about them), start calling around for someone else.

Reason 3: Conflicts of Interest

The reason fee-only advisors are usually so attractive to investors is because they’re not receiving commissions from certain companies for their products. If you don’t have a fee-only advisor, then you have every right to ask them how they make their paycheck. Ideally, you want them to be crystal clear about it with you. If they’re shoving new products at you every time you talk to them, be skeptical. 

A good financial advisor will know what your risk tolerance level is and make suggestions based on it. But if you’re just under a whirlwind of product-shove after product-shove, there’s probably a reason and it’s probably not in your best interest.

If you’re still not sure or you find they’re making strange or pushy suggestions about which products to pick, you’re allowed to use the Securities and Exchange Commission’s Investment Adviser Public Disclosure Website here. You want to look for Form ADV, which is their disclosure form. This document will tell you whether or not your advisor gets a commission for certain investments. If you see a pattern or it makes you uncomfortable, then perhaps it’s time to make a switch.

Who to turn to?

We put accountability, clarity and trust at the forefront of our practice. If you’re looking for a new financial planner in the Syracuse, NY area, give us a call today. We are happy to answer any questions you may have about how we operate and what we could do to help you plan your financial future.