I was in my late twenties when I watched the movie City Slickers for the first time. Having a somewhat dark sense of humor, I laughed hysterically at the scene where Billy Crystal presents to his son’s class. To this day, I still laugh out loud watching this scene. If you aren’t familiar, Crystal goes into a monologue about life and how “it’s all downhill from here.”
In the bit, he half-jokes about the fact that when we’re in our fifties, we have some minor surgery, but we’ll call it a “procedure.” Flash forward thirty years, and now I’m in my fifties and recently had what I am calling a “procedure,” just like Billy Crystal said.
The procedure worked out fine, and it was just part of being extra cautious, but it got me thinking about how complicated things can become if we ignore warning signs about our health. In many ways, it is similar to the issues that can arise when people neglect warning signs about their financial advisor.
So, with a bit of influence from my favorite City Slicker, here are some warning signs that it may be time to find a new financial advisor:
1. You don’t feel comfortable sharing openly with your advisor.
For financial advisors to make meaningful recommendations and impact your financial life, they need to understand the intricacies of your situation. That’s incredibly challenging for an advisor to do if they aren’t fully aware of what’s going on with your life and your money. If you don’t feel comfortable sharing openly and honestly with your advisor, it may be time to consider a change.
2. You don’t feel their expertise is broad enough, so you limit how you ask them for guidance.
A quality financial advisor should have the skills, experience, and training to advise on various aspects of your financial life. That includes investments, tax planning, retirement, insurance, estate planning, and more. A well-balanced financial plan will take into account each aspect, as they are all inextricably linked. If you find yourself limiting the questions or guidance you seek from your advisor because you feel their expertise is not broad enough, then that is a big red flag.
3. You don’t hear from them unless you call them.
Each client-advisor relationship is different, but if you only hear from your advisor when you call them, that may be a warning sign. Part of what makes a financial advisor great is their ability to spot trends and opportunities amidst an ever-changing market. Therefore, an advisor should proactively contact their clients with potential options that will fit their unique situation.
For example, current interest rates have been at historic lows, creating an opportunity for some to refinance their mortgages at lower rates. This is an opportunity for advisors to contact clients that may benefit and advise them on the pros and cons. The bottom line is that an advisor’s work is never truly complete, and there will always be opportunities that arise. Your advisor should keep you updated accordingly.
4. They don’t know or are not working in concert with your attorney, tax preparer, or other professional relationships.
Financial advisors are often referred to as the “quarterback” of your financial team. A quality financial advisor has broad expertise in each area of the financial planning process, which allows them to work in conjunction with other financial professionals in your life.
For example, many financial advisors will work closely with their client’s tax preparer to notify them of any specific strategies they’ve executed throughout the year. Additionally, financial advisors managing their client’s investments will often provide year-end tax statements to the tax preparer ahead of tax filing day.
In addition, an advisor going through the estate planning process with a client will often work with the client’s estate attorney to notify them of the specific documents and verbiage a client will need, based on the client’s wishes. Each of these examples is relatively standard for a financial advisor when working on behalf of a client.
5. They focus on a narrow area of your finances and take a “product-centric” approach.
Not all financial advisors are created equally. A significant key to understanding the difference between two advisors is understanding how they’re compensated. Some advisors charge a fee directly to the client in exchange for financial advice. Other advisors give the financial advice “for-free” and are paid by commissions from financial institutions for selling specific financial products. Advisors who charge for advice and are paid directly by their clients are viewed as having less of a conflict of interest than an advisor who is paid varying commissions for selling products.
The bottom line is – if your advisor is solely focused on one area, such as insurance or investments, and is recommending you buy specific financial products, then it may be time to shop around for a second opinion. Because of the nature of a commissioned advisor’s compensation structure, it can be very challenging for them to give conflict-free advice.
Just as health warning signs are not something to be ignored, warning signs related to the person you rely on for financial guidance should not be ignored either. If any of these red flags seem a little “too real” to you, then it may be time to explore other options. If you need a second opinion and want an advisor who puts your interests first and always provides conflict-free financial advice, schedule time with me today by going to ScheduleTimeWithSteve.com.