Sometimes, you are not the one who calls things off with your advisor – and these reasons could explain why.
4 Reasons Your Financial Advisor Could Dump You
The job of a financial advisor is to provide clients with advice and guidance on the best way to manage their investments. This help can be invaluable when building wealth or planning your estate. Choosing an advisor whose financial philosophy aligns with your own is an important step in ensuring that you’re able to work well together, but that doesn’t eliminate the possibility that things could go south. There are several reasons why a financial advisor might decide to move on. Knowing what they are can help you keep the relationship on solid ground.
1. You Opt Out of All Decision-Making
While financial advisors provide expert insight into things like how to maximize your portfolio’s tax efficiency and which 529 plan is the best if you’re saving for your child’s college education, they’re not interested in assuming complete control over your finances. Part of what working with a professional advisor entails is telling him or her what your financial goals are and what strategies you are or aren’t comfortable with. Your job is making decisions based on his or her recommendations.
Handing over full control without offering any input regarding what you want can lead to frustration on the advisor’s part because he has no way of knowing whether he’s getting it right. If your advisor chooses an investment for you that ends up underperforming, for example, and you complain about it, he may decide that the fees he is earning from your account aren’t worth the headaches.
2. You Ask the Wrong Questions
Asking questions is part of assisting your advisor in coming up with the best financial plan possible, but there are some things she likely doesn’t want to hear. Asking her to put a specific number on the return an investment will generate, for instance, is a waste of time because it’s impossible to predict with pinpoint accuracy.
It’s also bad form to question financial advisors about investments held by their other clients. This is a violation of confidentiality and it can land them in hot water, particularly if they’re a fiduciary. Fiduciaries have certain legal and ethical responsibilities to act in the best interests of their clients. Revealing someone’s personal financial details to a third party without his or her consent is a major no-no under the Investment Advisers Act of 1940. (For more on fiduciaries, see Choosing a Financial Advisor: Suitability vs. Fiduciary Standards.)
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