10 Key Signs That It's Time for A New Advisor
Women have more financial responsibilities than ever before, and now, more than ever, a financial adviser is key to keeping your portfolio on track and achieving your financial goals. While every year presents its own challenges, this year has been like no other. Financial markets continue to drop. Gas prices continue to skyrocket. War wages on in Ukraine, and the Supreme Court has reversed key decisions that have been in force for decades.
These issues, combined with the ongoing recovery from shutdowns and pandemic-related concerns, make navigating the financial world more difficult, prompting even the savviest investors to reconsider their portfolio strategies. Is your advisor in touch with you regarding how these recent issues may be affecting your portfolio? If not, they are not prioritizing your financial needs, and it might be time to find an adviser more familiar with the changing markets and your changing requirements.
Although the idea of switching financial advisers may seem like a nuisance, if you are working with one that is not meeting your needs or expectations, it is essential to switch sooner rather than later. If not, it could cost you significantly more in the future.
The Advice is Always the Same
Financial situations are constantly changing and so is the market. Since this fluidity is likely to affect your portfolio, your strategies and tactics must also change. If you have significant life changes or are approaching different milestones in your life, your financial advisor should provide you with advice geared toward that change.
For example, as you approach retirement, you will be transitioning from saving during the accumulation stage to creating a regular paycheck for yourself. At this point, your advisor should discuss with you when, from where, and how it will be best to distribute money from your accounts. If your advisor never seems to plan for these changes, it is time to consider one that is more attuned to your planning needs.
2. There is a Lack of Communication
Communication is vital between you and your financial advisor. In the financial world, things can move quickly, so keeping in contact with your advisers and getting a hold of them in a timely fashion is critical. One red flag is if your financial adviser only calls you once a year for a routine annual checkup. Your adviser should be communicating with you multiple times a year, providing you with quarterly reports and discussing possible changes to your financial situation or investment portfolio. Another red flag is if your advisor only calls for the purpose of selling something to you. While presenting new ideas or products is an integral part of their job, it shouldn’t be the only reason for reaching out.
3. Communication is One-Sided
The way your financial advisor communicates with you might also be problematic if it tends to be one-sided. Do you have a hard time getting a hold of your adviser? Do they take days or longer to get back to you? If so, your current adviser is not prioritizing your relationship appropriately.
Your financial advisor’s communication style is another critical factor to consider when assessing your relationship. Do you feel they constantly talk at you instead of listening to your concerns and having a back and forth conversation? Do you feel as if they are pushing their priorities instead of yours? Is the conversation full of confusing jargon? If so, it is time to find an adviser who can better communicate with you about your financial wants and needs. Investing can be complicated and confusing. Your adviser is there to guide you and help you understand the investing process. If they aren’t doing that, it may be time to switch.
4. You Feel Pressured During Decision Making
As their name suggests, a financial adviser is there to guide and should not be using aggressive sales tactics to get you to move on decisions you may not be sure of or have not had the time to consider. You might be told that you have to act immediately to not miss the deal of a lifetime. These phrases are very common in the boiler room types of firms, and if you are solicited by an adviser using these tactics or your current one tries to pressure you into making rush decisions, it is time to look elsewhere.
5. You Are Not Sure How They Are Paid
Like some attorneys, financial advisers may create confusion about how they charge for their services. You can expect to pay a fee for each investment. The fee is usually in the form of an adviser's fee or a commission. In the case of hedge funds, you will likely pay a management fee and a percentage of the overall profits. No matter which structure your adviser uses, they should be clear about their fees and how they are charged. If they are vague when discussing their fees or indicate they perform some services for free, it could be a red flag that you are being overcharged for their services.
6. You Aren't Receiving Reports as Promised
You should receive regular reporting of your investments. Most often, this is done with quarterly and annual statements, though in some cases, you may receive them monthly. These reports should contain the realized and unrealized gains and losses for all your investments. Other performance-related information should also be provided. This can include comparing your investments period-over-period, year-over-year, and providing the five and 10-year averages for each investment.
Whichever type of investment you have, your adviser should provide you with regular reporting to see how your portfolio is performing. They should also be able to discuss any questions you may have about the reports you receive. If your adviser fails to fulfill their reporting promises or starts slacking off on the schedule, it may be time to consider a more reliable adviser.
7. They do Not understand Your Risk Tolerance
Understanding your risk tolerance is critical to managing your investments. While higher risks usually are taken earlier in life, some more financially stable investors may have more room to play with their investments and be more willing and able to take a little risk later in life. While there are some normal risk patterns to follow based on age and years towards retirement, your financial adviser should gauge your risk tolerance to make better recommendations when it comes to investing. Your adviser should ultimately understand where your head (and heart) is relative to risk and guide you with that risk tolerance in mind. If they fail to do this, they will not be the best person to guide your investment decisions.
8. Your Portfolio Has Been Underperforming
While there are ups and downs in all types of investments, a good adviser can shift strategies when needed to ensure your portfolio continues to perform as it should. That doesn't mean you should run to the hills if you have a bad month or quarter. Yet, if your portfolio continues to perform poorly, and your adviser does not make recommendations to improve its state, you may want to find one more in tune with the changes in the market.
9. They Don't Understand or Know Your Financial Goals
Retiring in comfort is a common goal for many people but usually not the only one. Some financial goals may be pre-retirement. Others may be about leaving a legacy through your estate. Your financial adviser should ask about and understand your short-term and long-term financial goals to help create a portfolio best designed to achieve those goals. If you feel your financial adviser doesn't understand your goals or is not leading you in the right direction to achieve them, it may be time to find a better fit.
10. They Don't Coordinate With Your Attorney
Creating an estate plan can be a difficult and time-consuming process. A good financial adviser will be willing to consult and coordinate with your estate attorney to better understand your short and long-term goals for your estate. They can work with your attorney on tax strategies within the estate plan and manage possible tax situations for future heirs.
The Takeaway
If you notice any of the above signs with your financial adviser, it is time to take hold of your financial future by contacting Refresh Investments today. Your financial adviser is a vital part of your financial planning, and our advisers are here to help you find the right financial path to secure your future goals. We will look at your portfolio's performance and diversification, and work with you to come up with sophisticated solutions to keep your portfolio on track. Schedule your call today and make your financial future a top priority.
Sources:
https://www.forbes.com/sites/rcarson/2021/01/14/5-signs-its-time-to-find-a-new-advisor-in-2021/?sh=204e6c7055d4
https://www.entrepreneur.com/article/351681
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