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5 Signs Your Financial Advisor Isn’t Doing a Good Job

Posted by WrapManager's Investment Policy Committee
February 24, 2014

A good financial advisor can help you choose smart investments, map out your income needs in retirement, give you advice on estate planning, and maybe even help you save some money in taxes along the way. In other words, he or she can help you form a solid investment plan that changes with you.

A not-so-good financial advisor might not do all—or any—of those things well. Here are five signs your financial advisor isn’t doing a good job.

1) The Investment Strategy is the Same for Every Client

If your financial advisor is applying the same—or even just a very similar—investment strategy for every client, then chances are your unique financial situation and goals aren’t being taken into consideration. Lots of folks have similar goals, but a one-size-fits-all approach indicates that pretty much everyone has the same financial objectives, which is usually not the case.

2) Your Financial Advisor Only Calls When the Market is Rising

A good financial advisor should stay in touch no matter what the market condition, to ensure that their clients are up to speed on the investment strategy and to make sure the investment plan is up to date. We think a financial advisor should speak with their client at least quarterly, but more often if the client prefers or if needed.

3) Your Portfolio Strategy is Constantly Changing

As you check your statements and account activity, if you notice that there is a lot of buying and selling going on without any apparent rationale, and that your overall asset allocation is changing as a result, that could be a red flag.

It could mean your financial advisor doesn’t really have a strategy, or is unsure of what investments he or she expects will do well. A long-term portfolio strategy should have some conviction behind the investments chosen. A lot of trading could mean you’re racking up additional transaction costs as well.

4) Your Portfolio Strategy Hardly Ever Changes At All

On the other end of the spectrum, it could also be a warning sign if your portfolio remains static over long periods of time. There’s a chance your financial advisor isn’t paying attention, and could perhaps be focused on getting new clients versus managing the portfolios of existing ones. The market is constantly changing, and while that doesn’t necessarily mean a financial advisor needs to constantly change the portfolio, there are circumstances that necessitate periodic tactical shifts.

5) Your Financial Advisor Did Not Build You a Comprehensive Investment Plan

If your advisor simply wants to invest your money and doesn’t factor-in your income needs in retirement, your family’s goals, your personal finances, your tax situation, and doesn’t offer you guidance as to how to structure your accounts, then you probably aren’t getting enough service, and your asset allocation may not fully reflect your financial objectives. That could affect your ability to get the returns you need to reach your goals and maintain your lifestyle in retirement.

Is Your Financial Advisor Providing You with Good Service?

If reviewing any of the above points gave you some doubts, it may be time to consider if your financial advisor is giving you good service and whether you might need to explore other options. If you want to discuss what your financial advisor should be doing for you, please do not hesitate to call one of our Wealth Managers at 1-800-541-7774.

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