Wednesday , 26 October 2016

Is It Time To Fire Your Financial Advisor?

As more and more investor education and information is freely available online… investors now have an important choice to make. Should you go it alone, stick with your financial advisor, or fire him and find another, perhaps this time a fee-only planner? Words: 740

So says Emily Lambert (  in excerpts from her original article*.

Lorimer Wilson, editor of  (It’s all about Money!), has edited ([  ]), abridged (…) and reformatted the article below  for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Lambert goes on to say:

Most financial advisors are really not trained as to be skilled investment experts. They are trained to gather assets and keep their customers happy. They are salespeople. If you are lucky, the firms they work for will instruct them to create a sound investment plan for you.

It’s perfectly normal for your financial advisor to lose money some of the time. The stock market is a great humbler and everyone, even Warren Buffett, makes investment mistakes. During 2008, for example, even the top pros lost over 40% on their stock portfolios. [In fact, the average billion dollar plus pension fund in Canada lost almost 17%!]

Remember, the only professional investor who made money for his clients all the time was convicted Ponzi scheme artist Bernie Madoff.  He’s now serving a 150 year sentence in federal prison.  You want to be sure that your financial advisor understands you, the market and, of course, [a wide assortment of] financial products… So how can you tell if your advisor is competent or should be fired?

Forbes asked some advisors, who said that clients should be on the look-out for the following:

Your advisor is MIA. Many advisors didn’t return calls during the credit crisis… a lot of clients…couldn’t get advice when they needed it…their advisors were MIA.

Your advisor is clueless. Just because your advisor has an office and a secretary and a few letters after his/her name doesn’t mean he/she has a good understanding of the products he/she is recommending or, more importantly, he/she may not be aware of better products in the marketplace. Don’t fall for the product du jour, but if you read about a new product being offered and want to learn more, call your advisor and ask if it’s appropriate for you. Test his knowledge.

Your advisor seems to have lost interest. Your advisor should remember you, your investment objectives, and your risk tolerance. Otherwise this sounds like a one-way relationship. Oftentimes the amount of attention your advisor pays to you is directly correlated to how much money you have placed with him/her or how active you are as an investor. It is not uncommon for advisors to ignore their smaller clients.

Your advisor perks up around payday. A red flag is waving if he/she only seems interested in your account just before it’s time to be paid, which could be the end of the year if your advisor is a broker working on commission, meeting sales quotas.

Your advisor is selling you things. Watch out if your advisor is constantly pushing expensive products such as annuities or proprietary products…if he/she recommends investments with high fees, that’s also a red flag. He/she could be more interested in his/her commission than your investment.

Your advisor job hops. If you’re with a company and the advisor changes, you could be left with a different advisor who has to re-learn your situation. If your advisor has job hopped a lot (one or two switches is fine), that could be a sign that he/she has money, people or even compliance problems of his own. Check his/her job history and regulatory record by going to online databases like, which shows data collected about financial advisors.

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