Are you having doubts about the competency of your current investment advisor? Check out these 5 warning signs to find out whether you are just overthinking or really need to fire your investment advisor!
Having an investment advisor you trust is a crucial part of wealth management. However, just like any other relationship when things don’t seem to go quite right, you might begin to wonder whether you made the right decision or not!
Now, since investment is a serious yet tricky business to deal with, the first thing you need to ponder upon is ‘have you done a thorough background check on your investment advisor to check their fee structure, domain knowledge and how they manage their client's portfolios?’ If yes, then chances are you just need to have a one-on-one chat with them to clear the air. However, if you have been on the fence for quite a while where you constantly feel like you just aren’t getting the results you deserve or were promised, we advise you to look out for these 5 warning signs that suggest that it’s finally time for you to part ways:
1. Your advisor never asked you about your financial obligations:
Having the right financial advisor by your side is the key to build good wealth. So, while you are evaluating him, the first question you should ask is ‘does my financial advisor knows and understands my needs?’
Tell us one thing; would you trust a doctor who gives you a prescription as soon as you walk in without even asking you the symptoms? No! The same goes with your investment advisor. If he/she doesn’t take time to know your financial history or consider your needs, he/she certainly doesn’t really care about your financial goals.
As a general rule, a good investment advisor always enquires these basic details about you:
- How much do you earn?
- Is your job safe?
- How much debt do you have?
- Do you want to buy a house/car?
- Do you want to start a business?
- How healthy are you?
- Do you have life/health insurance?
- Do you have children? If yes, how do you plan to pay for their college tuition?
- Do you have a will?
- Do you have an emergency fund?
- What is your financial goal?
Remember, if your advisor knows the basics, only then he/she can suggest you to invest in what best takes care of your needs.
2. You were sold the idea of one promising investment:
Does your investment advisor sell you the idea of great returns by investing in one seemingly good fund? Has he/she ever told you that you don’t need to invest anywhere else because this one investment will bring you the fortunes? Every good financial advisor knows the value and importance of portfolio diversification. It’s time to open your eyes and see that your advisor does not have your best interests at heart. He/she may be doing this just for the commission.
3. You don’t get any monthly or quarterly reports:
Timely and transparent communication between you and your financial advisor is the key to understand the dynamics of financial planning. Ideally, you should get a monthly report of all the transactions (deposits and withdrawals), including the gains, losses and the current status of your investment. After all, it’s a record of your money and your advisor’s role is to make your financial life easier. But if he/she doesn’t bother to share regular reports or address your concerns in case an investment performs poorly or doesn’t take the time to explain basic financial terminology which you don’t understand, then, it’s high time for you to move on to another advisor.
4. Your advisor doesn’t include you in decisions:
Does your financial advisor inform you before making a trade on your behalf or changing the course of your investment portfolio? Does he/she discuss all the pros and cons of a potential investment with you? If not, you should consider this a red flag. Even if you have given the control to your advisor, you have the right to know where your money is going and why. What’s the point of keeping you in dark anyway?
5. Your advisor ignores your risk tolerance:
Imagine someone signing you up for a F1 race when you are only comfortable with driving at a speed of no more than 60 km/hr. The same goes with investment, does your advisor consider how much risk you are comfortable taking? Does he/she recommend you products specific products suitable to your long term goals? If not, there is clearly a communication gap and conflict of interest, which means, you should definitely consider changing your advisor.
In conclusions, financial matters are risky and confidential; make sure that your relationship with your investment advisor is transparent and reliable. If not, get an investment advisor you can trust. If you need any further clarification or have any queries, please mail us at firstname.lastname@example.org or call us on 022-67136713.