Firing Your Financial Advisor
Some of my peers will be in agony upon reading the title of this article. So be it. This is for the middle class of savers and investors who rely upon “professionals” to guide them on the way to achieving their financial and life goals. So how do you evaluate whether to maintain a current relationship, do it yourself, or find a different financial person? Should you consider firing your financial advisor? Let’s give this a try:
Are they proactive?
Do they check up on the progress towards achieving your financial goals? Do they review your goals with you as times change? Do they contact you to update your plan, or wait for you to call?
Do they fully answer your questions?
Financial products and services can be confusing, some think by design. Do they send you articles to increase your knowledge? Do they use other platforms like seminars and webinars to increase your understanding and answer questions in real time and afford you the opportunity to listen to other questions and answers?
Do they answer your emails and calls in a timely manner?
Frequent contact between advisors and clients is a key component to a trusting and effective relationship. Are they flexible in times to meet or interact via phone, email, Skype or other electronic means?
Are reports meaningful and simple enough to understand?
It’s easy to produce voluminous reports with jargon and multiple columns on spreadsheets. Do these reports help you take action, if necessary, or understand why not to take action? Do these reports lead to greater understanding or confusion?
Do you understand all the fees you’re paying?
Being clear about the true cost of financial products and services is gaining momentum. How your advisor is compensated and by whom is important to identify any potential conflicts of interest. Do they have sales goals and contests that reward them for certain behavior like selling products that make them and the companies they represent more money?
How do they make you feel?
Do they pass judgement on previous decisions? Do they praise achievement of milestones along the way? Do they just say, “just trust me”, without explaining why?
Are they passionate about helping people in general, and you specifically?
What signs do you see that they really care? Is it all about money and controlling more of your savings, or do they have a wider perspective? Would you send them to your best friends and family members?
Firing your financial advisor is a difficult decision. I could be the one you you’re firing, but I’ll take the chance to highlight these questions to evaluate your current relationship. I pledge to do better too. No one is perfect, but I’m trying my best to live up to the philosophy embodied in question 7.