You trust your financial advisor with some of your most important assets and your relationship is usually one of the closest professional relationships that you have. But did you stop to think what could happen if the advice you’re getting isn’t in your best interest? Getting bad financial guidance could end up having disastrous effects on your life.
It’s important to realize that there are two very specific types of bad advisors: the ones who mean to do well but do not have the skills or experience to guide you in the right direction. Then there are the much more insidious types, the advisors who purposefully give you bad advice for their own gain which borders on the line of being criminal. Either way, you should look for the following signs that will tell you if you have a bad financial advisor.
1. They Don’t Understand Your Values
A good financial advisor should ask you a lot of tough questions, and will take the time to get to know you and your goals. I am not just talking about how much you spend each month. These are deep conversations about what is important to you and those you care about. This will allow them to create a unique plan of action instead of guiding you with a one-size-fits-all approach. If you haven’t had these lengthy discussions with your advisor, it might be time to throw your fishing line back in the water and find a new one.
2. They Focus Too Much on the Market
If you notice that your advisor has tunnel vision on the market, this could be a sign they are more interested in their commissions rather than helping you to build a stable financial future. A good advisor will focus on the big picture, along with all of the different variables involved with creating a strong portfolio. If your advisor isn’t focused on the right stuff, don’t help them get rich from your risky investments and find an advisor who will have your best interest at heart.
3. They Don’t Reach Out Proactively
Does your advisor have a system to proactively reach out during the year? Do you have scheduled meetings based on your needs? You should not just meet when an issue arises but instead meet systematically to help you keep on track based on your plan. If you feel like you’re being kept out of the loop or you feel uninformed most of the time, it might be time to look into other advising options.
4. They Aren’t Upfront and Transparent About Costs
Any investment you make will have a cost. Whether it’s the advisor’s fee, load or commission, or internal costs that you may not even see, these costs should be made totally clear to you from the beginning. Also, you should receive detailed statements from the brokerage firm itself and not from your advisor’s office as well as quarterly and annual reports. If you feel unsure about how much your advisor is charging you or you aren’t receiving the reports, you should be. This is a very bad sign and you should consider getting a new advisor immediately.
Due to the lack of transparency in financial markets in general, it might be difficult to tell whether or not you have a good financial advisor. But by looking for the signs listed above, you will always be a step ahead of the financial advisors who give bad advice and keep their clients in the dark.
FINANCIAL ADVISOR WARNING! Are you being ripped off? Call 281-907-5136 to hear the 5 Costly Misconceptions about Financial Planning. Byron W. Ellis, CFP®, CLU®, ChFC®, CRPC®, is a CERTIFIED FINANCIAL PLANNER™ professional and Managing Director of United Capital Financial Advisors, LLC, a Financial Life Management firm. The information contained in this article is intended for information only is not a recommendation, and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances. The opinions expressed herein are those of Byron Ellis and not necessarily those of United Capital Financial Advisors, LLC. United Capital Financial Advisors, LLC (“United Capital”) provides advice and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, United Capital has discretionary authority over investment decisions. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. The information contained in this article is intended for information only, is not a recommendation, and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances.