Saturday , 3 December 2016


Should You Fire Your Financial Advisor? (6 Warning Signs)

Investors…should start taking a long hard look at their broker [financial advisor/planner] and rethink [what they expect of them] while at the same time empowering themselves to take control of their own situations. This article identifies several warning signs that it may be time to cut ties with your current broker. Words: 721

So says Kelly Campbell (http://blogs.forbes.com)  in an edited excerpt from her original article*.

Lorimer Wilson, editor of www.munKNEE.com (It’s all about Money!), has further 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.

Campbell goes on to say:

Here are six signs you should fire your financial advisor:

1. Your advisor works completely on commission. In a nutshell, commission-based advisors are paid to trade.  They are faced with putting your financial best interests against their own as they weigh investment recommendations.  These advisors might be charging low fees – or none at all – and those “bargain” rates just might undercut your financial security.  Choosing a financial planner with the lowest fees will often cost the investor more than they bargained for.

Alternately, fee-based financial advisors are paid a percentage of your assets and are compensated annually, meaning more transparency.  If your portfolio performs well, their paycheck will grow accordingly. As a result, they have a large interest in seeing that your investment goals are reached.  Commission-based planners have little incentive in performance.

2. Your advisor runs a one-man show. Having the depth and breadth of a well-run business that can be run even when your advisor is on vacation or out sick is vital.  An effective advisor should realize that he or she cannot effectively complete every task required to run a successful firm.  Also, investors should want to work with a business that is actually going to be around long after the individual advisor isn’t.

3. You don’t feel you can trust your advisor. Trust is the most important word in the financial world.  Remember, you’re dealing with the money that will get you through the rest of your life.

4. Your advisor only calls you when he wants to sell you something. Communication is imperative. The best financial advisors have defined schedules they follow for client contact, i.e. they make the call and you should not have to.  A good advisor will initiate a meeting with you at least once a year or more often if needed.

5. Your advisor is worried more about your money than about you. Are you just another account or does that advisor ask about you?  Advising someone about their finances is about knowing their goals and visions for the future as well as knowing their entire financial picture.  Planning is not just about investments, it is about the client’s complete financial life and aspirations for the future.

6. Your advisor is very reactive versus proactive. A good financial advisor will have a plan for every meeting, for every call and for every market event.  If that plan does not work, he will have a backup plan.  Neglectful brokers will adjust your portfolio ‘on the fly.’  They won’t have an investment management plan that can take advantage of the market going up and a way to protect your portfolio if the market tanks.

In addition, investors need to make sure they ask their advisor or potential advisor for credentials and designations like CFP (Certified Financial Planner), ChFC (Chartered Financial Consultant) or CPA (Certified Financial Planner).  These show that your advisor has made a commitment to the industry.  Also perform a background check by visiting FINRA.org or SEC.gov and click “broker check” to discover any infractions against them.

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*http://blogs.forbes.com/moneybuilder/2010/07/26/six-signs-that-you-should-fire-your-broker/

One comment

  1. Fortunately, I have never had to fire a financial advisor.