3 Signs That It’s Time for a new Financial Advisor

3 Warning Signs That It’s Time to Fire Your Financial Advisor (Part 1 of 2)

But ooh, this time I’m telling you, I’m telling you

We are never ever ever getting back together,

We are never ever ever getting back together. —Taylor Swift[1]

Financial AdvisorBreaking up is hard to do: it doesn’t matter whether it’s your first break up or your twentieth; if you’re the breaker-upper or the break-up-ee; or if you delivered the proverbial axe via a formal, certified letter, a middle-of-the-night “please don’t pick up! please don’t pick up!” voicemail, or an emoji-filled text message. Most of us have been privy to the rite-of-passage that is a romantic break up, but have you ever had to break up with your financial advisor? After all, your financial advisor is the trained professional you both trusted with your money and confided highly personal and intimate details about your personal, family, and financial life. For many, talking openly about money is a very private and emotionally charged topic that requires letting your guard down. Once you let someone in, it can be stressful to have to start the sensitive financial planning process all over again with a new person—but you absolutely can’t use that as an excuse for staying with the wrong financial advisor. Just because you’ve been working with a particular financial advisor for a significant amount of time or because he or she comes highly recommended or is part of your social circle or professional network, doesn’t mean that you have to continue the client-advisor relationship with your financial advisor. There are many times when staying in the client-advisor relationship is potentially harmful and counterproductive to your financial goals; and accordingly, it’s in your best interests to end the relationship and find a new financial advisor. Here are some “red flags” that it’s time to break up with your current financial advisor:

1.) You can never get in touch with your financial advisor: In the context of a romantic courtship, some people swear by playing the “hard to get” rule/game in order to appear less available and resultantly seem more desirable. Whether or not this an effective strategy can lead to some colorful debate; however, this is a debate that is way out of the topical scope of this blog. But one thing’s for sure, you do not want a financial advisor who plays hard to get and is unreachable when you need him or her. Most financial advisors, especially ones with established practices, have a large stable of clients and are busy professionals juggling many balls. But if you try to contact your financial advisor via email or phone calls and constantly find yourself waiting several days if not weeks to hear back (especially in an emergency or time-sensitive situation), this is absolutely unacceptable and often symptomatic of a larger problem. Maybe your financial advisor is overloaded with clients and can’t give each of them the personal attention they deserve or perhaps he or she lacks requisite organizational and practice management skills. Maybe your financial advisor doesn’t think your net worth is high enough to make you a priority. Whatever the case, you deserve better. Your financial advisor should always make you feel like a priority; after all, your financial advisor works for you, not the other way around.You need a financial advisor who is not only promptly reactive to your calls and emails but also proactive about reaching out to you to touch base on your financial health and goals for your financial future. If you can actually get a hold of your financial advisor, try firmly communicating your displeasure with his or her lack of responsiveness and what your expectations are for the timeliness of your future interactions. If your financial advisor doesn’t immediately rectify the unacceptable behavior, it’s time to find a new financial advisor.

2.) Your financial advisor asks you to do something shady, unethical, or illegal: While there are many trustworthy financial advisors out there, there are also some bad seeds that are part of the unscrupulous underbelly of the financial planning industry. You need to learn to protect yourself from the deceitful and corrupt: educate yourself about financial advisor scams, keep your discerning eyes and ears open, listen to your gut, and remember the adage that “if something seems too good to be true, then it probably is.” In most cases of financial fraud, there’s typically an issue concerning the custody of the victim’s funds. If your financial advisor has the ability to make investment decisions for you, then he or she should never take custody of your investments. Some other signs that something fraudulent may be amuck include but are not limited to a financial advisor who:

  • Asks you to sign a blank check or form;
  • Seeks full power of attorney;
  • Asks you to wire money; or
  • Asks you to make out a check to a person other than the account’s custodian.

You want to be able to trust your financial advisor, but trust is something that must be earned and blind trust is imprudent and naïve. For a summary of common financial advisor scams, check out the soon-to-be-published Summit blog entitled “Popular Financial Advisor Scams and How to Protect Yourself from Them.” We encourage all clients to thoroughly evaluate the background of any financial professional they intend to do business with. Check out the SEC’s online Ask Questions brochure for helpful tips on how to investigate financial professionals.

3.) Your financial advisor is neither upfront nor transparent about his or her fees: Financial advisors should at all times be open and transparent in their financial dealings with clients—this includes their fee structure and all fees they may charge the client for professional services rendered. However, complete fee transparency, where clients are completely confident that they understand their financial advisor’s fees and fee structure, is unfortunately not the norm in the financial planning industry. You want a financial advisor who is upfront and clear about fees from both the beginning and throughout the entire course of your client-advisor relationship.

As discussed in a previously published Summit blog about the importance of fee transparency for financial advisors: at a bare minimum, your financial advisor needs to be able give you a clear picture of the following:

  • What they pay in fees and commissions;
  • A specific rundown on how much they are charged for transactions; and
  • An annual summary the client can send to their tax preparer/accountant every tax season.[2]

If your financial advisor is not transparent about his or her fee structure, does not spend adequate time to ensure you comprehend it, changes fees without notice, doesn’t provide complete billing and invoicing details, or appears secretive about fees, speak up. If you don’t get the transparent fee structure information you’re looking for, change advisors. Remember, it’s your money and you have every right to know the specific details of how much things are going to cost and where your money is going. You’re not being annoying by asking these things but rather you’re being a self-advocate, which is a critical part of being financially healthy.

The red flags discussed in this blog are just some of the warning signs that may indicate that it’s time to break up with your current financial advisor and find a new one. For a discussion of additional red flags, check out the soon-to-be-published second part of this blog series entitled “Additional Warning Signs That It’s Time to Fire Your Financial Advisor (Part 2 of 2).”

For more information on Summit Brokerage Services and our independent financial advisors, visit www.joinsummit.com or contact us at (800) 354-5528. We’ve been voted the number one boutique independent broker dealer firm in the country—let us show you why!

 

About Summit Brokerage Services, Inc.

Summit Brokerage Services is part of Cetera Financial Group. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.

 

About Cetera Financial Group

Cetera Financial Group® (“Cetera”) is a leading network of independent retail broker-dealers empowering the delivery of objective financial advice to individuals, families and company retirement plans across the country through trusted financial advisors and financial institutions.  Cetera is the second-largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions.

Through its multiple distinct firms, Cetera offers independent and institutions-based advisors the benefits of a large, established broker-dealer and registered investment adviser, while serving advisors and institutions in a way that is customized to their needs and aspirations.  Advisor support resources offered through Cetera include award-winning wealth management and advisory platforms, comprehensive broker-dealer and registered investment adviser services, practice management support and innovative technology.  For more information, visit www.ceterafinancialgroup.com.

*”Cetera Financial Group” refers to the network of retail independent broker-dealers encompassing, among others, Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied Securities, Girard Securities, The Legend Group and Summit Brokerage Services.

 

[1] Taylor Swift. “We Are Never Ever Getting Back Together.” By Taylor Swift, Max Martin, and Shellback. Red. Big Machine Records. Tennessee, 2012.

[2] http://www.investmentnews.com/article/20140410/FREE/140419988/merrill-lynchs-thiel-fee-transparency-key-to-restoring-trust

Stay Connected

Personalized Industry Newsfeed For You

Thank you. You are now subscribed.

Close