Hiring a financial advisor is one of the most important but stressful decisions you have to make regarding your money. With the help of a good financial advisor, you will have a better grasp of your financial situation and the strategies to achieve your goals faster.
A competent financial advisor will help you invest your money, create a suitable saving strategy, set up your retirement fund, create an adequate emergency fund, and properly plan for big expenses.
Needless to say, the relationship with a financial advisor can be intense. After all, you entrust this person with intimate details about your finances. Because money touches every aspect of your life, your financial advisor will end up knowing more about your life than some close friends.
They will know exactly how much you give to the church or to charities, how much you’re in debt, how much you save, and if you have vices that drain you financially. They’ll be privy to your health matters, life dreams, and family drama.
It is, therefore, important that the individual you hire as a financial advisor is trustworthy and that you feel comfortable with them. It makes sense to re-evaluate the relationship you have with your financial advisor from time to time.
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Always bear in mind that your financial advisor works for you and you can terminate the relationship if it doesn’t serve your interests. Here are some common red flags that you should consider firing your financial advisor:
They don’t check in with you regularly
Like any relationship, your relationship with your financial advisor is strengthened through communication. Infrequent and irregular communication leads to a shallow relationship and lack of trust.
According to study done by YCharts on financial advisor communication, 60 per cent of clients said that frequent communication would give them more confidence in their financial plan.
With the volatility of the market place, a competent financial advisor will make effort to regularly update their clients of changes that may affect their investments. This is especially important in crisis periods such as the 2020 Coronavirus pandemic.
But even in the absence of disasters, the financial advisor should have a regular schedule of reaching out to their clients to see how they’re doing and give them any updates.
The advisor should be proactive with communication, including setting up regular portfolio reviews.
For most people, email is the most preferred way of receiving communication from financial advisors. Emails are more formal, secure and confidential – everything you desire for communication about your financial affairs.
If you don’t mind, you can ask your financial advisor to contact you regularly through phone calls, texting or video calls. While these forms of communication serve their own purpose, your advisor should also schedule in-person meetings for more in-depth discussions about your finances.
You don’t understand what they’re talking about
Finance can be quite complicated, especially if you’ve just started investing. If you don’t understand the jargon, it might feel like the financial advisor is speaking in a dead language. It is ok to not understand everything about finance, and that is exactly why you’re hiring a financial advisor in the first place.
It is the job of your financial advisor to explain anything that you don’t understand in a way that can make sense to you. If they won’t or can’t break down information in a way that is understandable, that’s a red flag.
They might be using jargon to confuse you and hide something. Even if that isn’t the case, the bottom line is that they’re not doing their job well, which means they deserve to be fired. Ask for an explanation when you don’t understand something and if it isn’t explained to your satisfaction, consider looking for someone else to manage your finances.
They have hidden fees
This is one of the most common complaint clients have when it comes to financial advisors.
As part of your initial conversation when hiring someone to manage your finances, you should ask them exactly how much they will cost you.
Ask them if they will charge you per hour, per session, per financial plan, commissions, or a percentage of your portfolio. They should be able to explain their fee structure to the penny.
If a financial advisor seems fishy about how much they’re charging you or if they’re earning commissions for investment options they recommend to you, that’s a red flag.
It is best to go for a financial manager who is fee-based, which means they only receive fees from their clients and aren’t paid commissions for selling products to their clients.
These kinds of financial advisors might be more expensive, but they serve their clients’ best interests. But if you choose to go with a commissioned broker, be sure to have clarity on how they earn their commission.
You’re uncomfortable with them
As we’ve noted, the relationship with a financial manager is long term and intimate. Therefore, the financial advisor needs to be someone you trust fully, are comfortable with, and have some degree of liking for.
You don’t need a financial advisor who acts like they’re your personal judge. If you find yourself dreading their calls or reluctant to discuss personal details that affect your finances, it might be time to end the relationship.
You don’t need a specific reason to fire a financial advisor. The fact that you feel uncomfortable with them is enough reason. And finally, if they try to guilt trip you about leaving, that should only solidify your decision to fire them.