5 Signs You Need A New Financial Advisor

Personal Finance

5 Signs You Need A New Financial Advisor

Is it time for you to look for a new financial advisor? Here we examine some of the tell-tale signs.

Published on 23 January 2018

The benefits of having a financial advisor are manifold. Financial advisors can help those who lack the time, expertise, or interest make their money work for them, enabling them to live their lives freely with the confidence of a financially secure future.

The decision to engage a financial advisor is typically made after in-depth discussions with potential candidates that cover topics such as understanding your current holdings and net worth, your investment objectives and risk appetite, and the different financial products available in the market.

The financial advisor you select should, with your best interest at heart, be able to provide ideas on how to invest and grow your money so that you can achieve your long-term financial goals.

A good financial advisor can help you monitor and manage your wealth portfolio, helping you navigate the often confusing investing world, and putting you on a path to lasting financial success and security.

In an ideal world, the above description would apply to each and every financial advisor, but unfortunately this is not the case. Indeed, finding the right financial advisor is not an easy task. If you did not make the right decision in your choice of one, or were just plain unlucky, you might find yourself in need of a replacement.

Here are five signs that tell you it’s time to search for a new financial advisor:

1. Your calls and emails are ignored

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Your financial advisor should be there for you when you need him or her. The financial markets move at lightning speed and should you need help on deciding something such as whether to buy a stock, or if you are trying to make an important financial decision such as whether to buy a house or a car, your advisor should be only a phone call or email away. If your call or email is not answered for a protracted period of time, that’s probably a sign that you should look elsewhere for financial advice. There is no point in having a financial advisor who behaves like you don’t exist.

2. You were never asked about your personal goals

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What are your personal goals? This should be among the first questions that your financial advisor asks you. Neglecting to do so is an indication that your financial advisor is not trying to understand your long-term dreams and objectives and will not be able to create a tailored financial plan for you. For example, if you are trying to pay off a mortgage and plan for retirement, those factors all need to be taken into account when determining your investment and savings strategy.

3. Lack of understanding of your risk tolerance

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Your financial advisor should have a good grasp of your risk tolerance, and your willingness to have exposure to high-risk investments such as emerging market equities and venture capital in your portfolio. If you are the sort that is open to these type of high-risk investments, be sure that your financial advisor understands this and shapes your investment portfolio accordingly. If – on the other hand – you are a conservative investor, your financial advisor should structure your portfolio with a higher percentage of fixed income vehicles such as bonds.

4. More salesman than advisor

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It is important to be aware of your advisor’s background. If he or she works with a large financial institution, know that these individuals may be inclined to push their organisation’s investment products – although they may not necessarily be the right fit for your portfolio. Make sure your advisor’s priority is your financial goals – rather than his or her company’s sales objectives.

5. The composition of your investment portfolio is constantly changing

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Frequent transactions in your portfolio might be a good thing – if they result in significant gains at the end of the year. However, be aware that some financial advisors make a commission from every transaction, so a high volume might mean they are taking advantage of this and looking to rack up higher fees.

The bottom line

If you are seeing any of the above signs, it is worth considering changing your financial advisor. The best way to do it is to give him or her a call and communicate politely that you have decided to let him or her go.

You might end up wanting to give your advisor a second chance, but do remember your future financial security is at stake. If there is no improvement in service, severing the relationship and looking for a new financial advisor is something you should do for yourself.