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How to Fire Your Financial Advisor

By: , dated April 15th, 2013


Years ago, there was a television show called Caroline in the City, where the lead character was never any good at ending relationships. In one episode, she couldn’t bring herself to change dry cleaners—no matter how many valuable pieces of clothing were ruined—until he died (and, at that, she gave the eulogy at his funeral).

And rather than tell her hairdresser she was seeking a new look from someone else, Caroline said she was moving to Norway, which the hairdresser bought until bumping into her at a party (and, at that, she hastily agreed to go rushing back to him).

Of course, Caroline was a fictitious character. The difference between her and real people like us is that we could never pull off that Norway thing in the first place.

Ending relationships is never easy. The mere thought smacks of confrontation, hardship, betrayal, and a whole range of emotions most of us would rather avoid.

Still, the more you let a bad financial relationship linger, the more it costs you, literally.

When managing your affairs, remember one rule: Business is business. No matter your personal feelings for someone, he’s gone if he can’t do the job to your satisfaction. The fictional Caroline got lucky with the lousy dry cleaner because he died; you might not be so lucky if you pick a nice-but-incompetent financial planner.

Smart Investor Tip

Business is business. Your personal feelings for an advisor don’t matter; if he can’t do the job to your satisfaction, he’s gone.

Typically, financial relationships end when expectations aren’t met. If a real estate agent doesn’t sell the house, your decision not to renew the listing is easy because the contract you signed was finite; in most investment, banking, accounting, and legal relationships, there’s an unwritten stick-with-the-guy-for-life mentality. As noted in Chapter , the ideal relationship with an advisor ends when you die or he retires.

Firing an advisor is easy if you suspect fraud, wrongdoing, or any sort of problem. You don’t just dismiss the counselor in those cases, you file complaints and pursue legal remedies to get your money back.

But short of those extremes, there are plenty of times when advisory relationships just don’t work out, when you feel let down by the goods and services offered, and you believe you would be better off working with someone else. If a relationship sours for any reason, the dismissal process is simple and straightforward. You may allow a final chance at redemption, but here are the steps to follow:

Step 1: Talk to Your Advisor

At the first sign of trouble when service does not jibe with your expectations tell the advisor your concerns.

If the advisor pooh-poohs them, remind him that “It’s my money.” For that money, you deserve, at the very least, an explanation of why your expectations are not being met. If no explanation is forthcoming, you know the advisor isn’t taking you seriously.

If that’s the case, skip Steps 2 and 3 and go directly to Step 4.

Signs of an Advisory Relationship Gone Wrong

Your advisors work for you, and they should be responsive to your inquiries, needs, and issues. The following are all service-related reasons that show a problem in the relationship; if you have experienced even one of them, you should consider whether it was a “firing offense.”

  • There is unexplained/unexpected account activity.
  • You don’t completely understand the advisor’s actions.
  • Promised services are not delivered.
  • Charges and fees are higher than anticipated, or there are hidden costs you were unaware of.
  • Key information is only revealed when questioned or when trouble is evident.
  • The advisor expresses disappointment or anger over your decision NOT to follow some piece of advice.
  • There are disagreements over core strategies/beliefs.
  • There are unpleasant surprises.
  • The advisor shows a lack of time and interest, as if he was more anxious to get you as a client than to serve you now.
  • Your spouse or partner distrusts the advisor (especially if you picked the advisor, and the mistrust from your significant other has increased over time).
  • Your advisor is thinking only “inside the box,” so that your service is more one-size-fits-all than personalized for you.
  • The advisor treats you more like an account number than a client or friend.
  • The advisor fails to meet the expectations you set out during the hiring process.
"Adapted from Getting Started in Finding a Financial Advisor.
Copyright 2010 by Chuck Jaffe. All rights reserved. John Wiley & Sons, Inc."
Content provided here under exclusive license

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Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2014. Content published with author's permission.

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