Your life is busy and full. You have your family and friends, your business, your hobbies and more. These fill up your days, leaving precious little time for other important cares like your finances. That's why you find a financial advisor, an expert who can steer you through the confusing world of investments, planning, and legal and tax ramifications while you focus on the other significant things in life.
While you're taking care of these, your financial advisor can pay attention to the issues surrounding your investments and retirement plan. They can keep tabs on the markets, changes in legislation, investment pitfalls and opportunities, and more. That's the way it should be. Unfortunately there are financial advisors who neglect to tell you the whole story, including their fees, their shortcomings, and their loyalties.
Financial Advisors' Fees
When you find a financial advisor, one of the first things you should ask about is what kinds of fees you can expect. You probably wouldn't buy a car without learning how much it will cost you, and you shouldn't hire a financial advisor without this information either.
Financial advisors can charge a percentage of your assets (generally 1-2%) or a flat rate. They may also be paid a commission on the investments you make. Beyond these fees, however, there might be other undisclosed or hard to find fees. These other fees include the following:
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Mutual fund fees when they are purchased, sold, or a combination of the two transactions
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Stock trading commissions
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Transfer costs (if you leave one financial advisor and start using the services of another, you might be charged a transfer cost from the advisor you're leaving)
What can you do about this? Ask your financial advisor about total fees. Specifically mention the fees listed above, and look for a financial advisor with one inclusive fee to help avoid any surprises.
Financial Advisors Rarely Fire Themselves
It can be difficult to know if your financial advisor is living up to customer service expectations. A good financial advisor quietly takes care of things for you without to much noise or disturbance. But a less than desirable one, or one that isn't doing a good job, probably wont call you offering to resign. There's no incentive to do so.
If your investments aren't doing well, you're not happy with the service you're receiving or you feel your financial advisor is just doing the minimum, it's time to find another financial advisor. There are many great financial advisors out there, and there's no reason to stay with a mediocre one.
This is why it's important to employ an unbiased financial advisor in terms of your investments. A financial advisor who is beholden to a certain set of products may not have your best interest in mind, and that brings us to the third thing your financial advisor probably isn't telling you.
Your Financial Advisor May Be Putting Their Interests Before Yours
There are many types of financial advisors, but only those bound to the Fiduciary Standard are required to put your interests before theirs. Why does this matter?
Brokers and other kinds of advisors make money from certain transactions, so there is incentive to recommend these specific transactions, whether or not they're actually good for their clients. For example, several years ago, Bloomberg reported that certain financial advisors were making billions of dollars as their retired clients suffered due to self-interested financial transactions.1
Clearly, you need to find a financial advisor with transparent fees, stellar customer service, and an obligation to put your interests ahead of his or her own. Read more about Wrapmanager here. Or call one of our Wealth Managers today at (800) 541-7774 to learn more about the services WrapManager offers.
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