Counselor. Confidante. Coach.
A financial advisor can play multiple vital roles, helping you develop a personalized investment strategy, build a path toward your long-term financial goals, and navigate the ups and downs of the market.
When you have an excellent financial advisor, your stars start to align, and you reach closer to your goals every day.
But if you receive questionable investment guidance and the other party isn’t fulfilling their end of the bargain, it can start to feel like you’re throwing away money in the name of advisor fees.
So, how do you know when it’s time to fire your financial advisor?
Here are 5 tell-tale signs that it may be time to find another advisor:
- They Don’t Take the Time to Understand Your Needs
Before creating an investment program, a good financial advisor will take time to learn about you and your family’s needs as much as they can.
Discussions about investments should not happen till there’s a deep dive and discovery on your ongoing expenses, how much debt you have, retirement goals, etc.
Just like any paid professional, a financial advisor should provide you with a level of respect and customer service. The advice and service offering should evolve with time; otherwise, the advisor has commoditized you.
- They Are Not Preparing You for What Is Around the Corner
Markets, the tax code, and the body of laws governing estates are always in a state of flux.
Your advisor should give you hypothetical “what if” scenarios to help you prepare for a new direction in the markets or potential tax law changes.
If your financial advisor is not proactive about navigating those changes, chances are you’re not receiving your money’s worth.
You want to ensure your advisor is on top of your investments and looking out for you. You should not be the one reaching out to your advisor to discuss your financial plan or investments.
- The Financial Advisory Firm Isn’t Registered with Governing Authorities
Find out if the person advising you is a registered investment advisor.
Ask for the official name of their firm and run it through the US Securities and Exchange Commission.
If he/she is commission-based, use the Financial Industry Regulatory Authority’s free tool to determine their credibility.
While at it, check if your advisor has a series of disciplinary actions. If they do, firing your financial advisor is the logical thing to do.
- They’re Not Transparent About Their Compensation Structure
Like the rest of us, advisors need to make money.
You should know exactly what you’re paying for.
Payment can include advisor fees calculated as a percentage of your assets under management or commissions generated from the products they sell.
Asking questions like “How do you get paid?” isn’t being rude.
If your advisor isn’t giving you the clarity you want, you’re better off heading for the exit sign. After all, it’s your money, and you need to be certain that your advisor has your best interests at heart.
- They Don’t Return Calls/Emails
Timely communication between you and your advisor is essential. Sometimes, you just cannot wait till your next scheduled meeting to make some changes to your account.
If you have to wait for several days or weeks to hear from your advisor, it’s time to show them the door.
A lack of responsiveness can signify bigger problems, such as a lack of organizational skills or empathy for clients.
However, this does not mean you hound your adviser with calls whenever you hear rumors of a stock market crash.
- You’re Not Getting the Results You Want
When your advisor stops delivering on the goals the two of you set together, or if you notice that your investments are no longer helping you reach your financial goals, it may be a sign to look for someone new.
But before you show them the door, ensure you’re not punishing them for something out of their control, such as an overall market downturn that everyone is suffering from.
A financial adviser isn’t a fortune-teller, and it’s unlikely they will always be up in a down market.
Did Your Financial Advisor Pass the Test?
If you’re not feeling contented in your current advisor relationship, it may be time to break things up.
Firing your financial advisor, especially if you’re fond of them, may be hard but necessary.
Breakups are never easy, but to achieve your goals, you have to make hard decisions.