Most of the stories about this involve male advisors ignoring wives while they plan exclusively with the husband. The problem with this is that both partners need to understand and execute the financial plan that hey create with their advisor. Often, wives who are cut out of the process are left not knowing what to do when their spouse becomes unable to manage the money. If your advisor cannot seem to develop a plan that involves both you and your spouse, look for one that does.
Ignoring Half of the Couple
Investment can be complicated, but a large part of your advisor’s job is to make sure that you understand how your money is invested. That doesn’t mean that he or she should talk down to you, either. You need to understand where your money is invested, the risks that go along with those investments, the historic return, and the expected return. Whenever a change is made, you should know the reason why your advisor thinks that one your assets needs to be sold and another asset purchased in its place. Similarly, your advisor needs to know what your goals are, and be able to explain how every change in your investment strategy will help you to meet those goals.
They Won’t Explain Things to You
Look at the behavioral patterns of your adviser. Being late (even once) signals that one party does not value the others time, also signally the potential for oversights in other areas (particularly your finances!)
If you’ve decided to use an advisor that works on commission, then you need to be aware that his or her pay is determined by the type of investments that he or she puts you into. Obviously, this is a problem if they can make a lot more money by recommending a product that earns them a large commission but does not make a lot of sense for you. When you’re inexperienced with investing, however, it can be hard to know if your advisor really has your best interest in mind when developing an asset allocation plan. You may want to choose a fee-based advisor who will charge you upfront for advice, but won’t accept commissions for the investment products they recommend. If you do decide to go with a “free” advisor, ask a lot of questions about how much he or she is getting from the investment choices that were made for you. Be suspicious of any commission that is over 2% of the total account value.
They’re More Worried About Their Returns Then Yours
A common mistake advisors make is assuming that after they have set you up with an initial plan, their job is done. In actuality, you’ll probably have a lot more questions several months after starting your investment plan than you did the day that you got started. If your advisor isn’t returning your calls or emails, then you need to find an advisor who is looking to develop a long-term relationship with his or clients; not just one who wants to make a commission and move on. Of course, be aware that a good advisor will want to do some research before answering complicated questions, so give him or her a few hours or even a day to answer a complicated question.
Not Returning Your Calls
Some financial advisors make the mistake of thinking that the fewer people who are involved between you, them, and your money, the better. Unfortunately, such a limited relationship is a breeding ground for fraud and catastrophic mistakes. A third-party custodian, such as an independent brokerage, will send you statements independent of your advisor. That allows you to verify that the account is really earning what your advisor says, and grants you various other protections.Similarly, your advisor should not feel threatened by the opinions of other advisors. If bringing up other ideas is met with a lot f resistance without a good explanation, it may be time to look at other advisors.
Not Wanting Another Opinion or Custodian
A good advisor will have a lot of experience with a multitude of different investments in many different types of markets. Because of this, he or she should feel comfortable telling you why an investment is losing money or why he or she thinks it’s a mistake to buy or sell a particular asset. Getting angry or upset with you after you’ve made the decision, however, isn’t a good sign. A professional advisor knows that sometimes his or her clients will not make the same decision that he or she recommends. They should be able to tell you the truth, but accept your answer.