Should I Fire My Financial Advisor?
As the CEO of your money, you have the ultimate responsibility for it and the people involved with managing it. Markets are volatile and sometimes things don’t go as planned. When this happens, should you scrap the plan, fire the advisor, or both? Ultimately, it is a difficult decision because a relationship with a financial advisor always gets personal. Some of the reasons to move on from a financial advisor are clear and others are harder to articulate
First, let’s start with a reason not to fire your financial advisor. For example, if the market suffers a severe downturn and your portfolio has a bad quarter, it is probably not a good reason to move on.
Clear Reasons to Fire Your Financial AdvisorDoes your financial advisor consistently give you bad advice? Is your portfolio is taking losses that are not market related? Does your financial advisor not communicate with you or isn't willing to meet with you on a regular basis? Is your advisor unwilling to answer basic questions about your account? If so, it may be time to move on. Financial advisors cost money, but the cost should be considered an investment where the returns should exceed the costs. You pay for the privilege of regular communication by hiring the advisor and you should get what you are entitled to. An advisor should be able to provide basic account information, how investments are being made and how accessible your money is if you need it.
Intangible Reasons to Fire Your Financial AdvisorSome of the less obvious reasons to part ways with your financial advisor come down to the emotional relationship you have with him or her. For example, if you don’t understand the advisor or if you feel intimidated by them, start looking. A good financial advisor is one that speaks your language and makes complex financial concepts understandable. A financial advisor should never intimidate you. They work for you and should be your personal advocate.
Does your advisor have trouble staying employed with the same firm for any length of time? An advisor who constantly changes firms is a sign of potential trouble and worth checking into. Fortunately, disciplinary and compliance records are available through the Financial Industry Regulatory Authority (FINRA) and accessible by the public through BrokerCheck.
Does your advisor play the blame game? Do they constantly blame other or un-related events for the performance of your portfolio only to follow up with no changes to the portfolio? The reality of the buy and hold strategy used during the 1990’s has turned into the buy and hope strategy of today. Many of today’s financial advisors are using tactical investing methods as a way to minimize risk while maximizing returns in these volatile markets. An advisor who does nothing is signaling that they may not be equipped to manage your portfolio in today’s environment.