As I work with my clients I find that sometimes having to change financial advisors or investment advisors is the hardest thing for them to do.  Mostly because they are emotionally invested in the relationship or scared that they might end up making a mistake.  However, there are situations where a changes is warranted.  I find that most people pay attention to it when they are approaching retirement or already retired.  Here are a few red flags that get missed most of the times.

1.       Your advisor hasn’t called you in over 3 months, and you haven’t had a face-to-face meeting in over 12 months.


a.       Your advisor is too busy for you.  Like doctors, advisors like to grow their clientele, and many times they over extend themselves.
b.      They have more important clients compared to you and you are probably getting B, C, or D grade service from them.
c.       Perhaps your advisor is going through a major life event – it may be your turn to pick up the phone and find out.

How would you rate your advisor on service, on being there when you need them, on making you feel that they are actively taking care of your financial needs.  Rate your advisor on a scale of 1 to 10.  Ten being excellent. ________

2.       You love your advisor as a person, but they don’t have the skills you need for the future management of your affairs.

In the same way that you need a cardiologist when you experience a heart problem and your family doctor can no longer help you, you also need different advisors at different times in your life.  The label: financial advisor or investment advisor is misleading.  Advisors specialize in areas that they enjoy working in or have special skills for.  For example, some advisors enjoy working with seniors and have an in-depth knowledge of regulations surrounding their issues.  Other advisors specialize in working with small business owners etc.  You need to work with an advisor who has the skill set you need in order to navigate the next 10-15 years of your financial life or more.

A lot of times people start working with a financial planner at the bank branch – this person has limited skills combined with limited access to products that may be needed for pre-retirees and retirees. 

Do you think your advisor has what it takes? What score would you give your advisor on a scale of 1 to 10.  Ten being excellent. _________

3.       Your advisor hasn’t conducted a financial simulation for you that can show you where you stand with regards to accomplishing your various financial goals. 

For example, lets say you want to buy a cottage in five years time and pay off the mortgage on your home – is your advisor keeping track of your progress on these fronts and advising you with regards to strategies you may use in order to make faster progress?  How would you rate your advisor on this aspect on a scale of 1 to 10.  Ten being excellent. _________

4.       Your advisor cannot hold a conversation with you about how the economic and political climate of the world will impact your investments and your financial plan.

You would be right to expect your financial advisor to be abreast of world issues and how they impact you so that they can help you navigate through market volatility and help you stay away from investments that have the potential to perform poorly.  How do you rate your advisor on this  aspect on a scale of 1 to 10.  Ten being excellent. __________

5.       Your advisor is not providing you with information on changing market situations and regulatory climate

Good advisors try to ensure that their clients are well informed about what is going on, they also make an effort to educate their clients on investing and financial strategies so the over a period of time their clients feel more and more confident and more and more in control.  How confident do you feel about the way your investments are being managed and you financial plan is set-up?  Rate your position on a scale of 1 to 10.  Ten being excellent. __________
Ten points for each question is a total of 50 possible points.  If your advisor scores less than 80% or 40 points, it’s time to show them the door.

Remember that they are not working for free, they are earning a commission or a bonus based on the amount of assets you have with them – so ask yourself the question are they earning the money they make? Don’t be shy to ask your advisors how they get paid and how  much specifically are they making on your money.

If it is time for a change, ask around and meet at least three advisors.  Use the easy grading given below to put them all on an even footing.  Again grade them on a scale of 1 to 10.

1.       How often they meet with their clients?

2.       What is the average client size (you don’t want to work with someone who has too many clients bigger than you or smaller than you)

3.       What is their process? Do they follow a set of principles to take you through a planning exercise – if they fumble, they don’t have a process and if they don’t have a process then you will get very ad hoc service.

4.       Ask them what portion of their client base is like you (for example if you are 5 years from retirement, ask them how many of their clients are similar), this gives you an idea of their area of expertise.  And of course, ask them straight out what does their “ideal client” look like.

5.       Ask them how many clients they already have and what is their plan for growing their business  and closing their doors.  Advisors who don’t have a plan for how big they want to be and what sort of service they want to offer are bad news.

6.       Ask them where they get their market intelligence from, what papers and periodicals do they read to stay on top of things and what sort of information, research and educational opportunities will they be providing you?

7.       Ask them why they work with the bank/investment firm they are with.  Organizations have core values and you want to align with an individual and an organization whose core values line up with yours.

8.       Lastly, score them on whether or not you like them.  Working with an advisor is a long term relationship that involves close contact, you want to be able to like and trust the person you do business with.

Put everyone on the same scale and then decide who you wish to work with.  Good luck!

5/19/2013 05:37:25 pm

These tips and advices are really very much effective. Keep it up with sharing such useful information with us. Thanks for the post.

7/17/2013 08:14:26 pm

When you meet a financial advisor for the first time, you are basically asked two questions. First one being, how much money you need in retirement and what's your risk tolerance? Based on your need and your future goals, you advisor should take proper decision. But if you notice your advisor can't explain to you the products that are significant for investors and not clear in his math then it's time to make a change.

3/9/2014 05:52:27 pm

very nice post sharing interesting information in various helpful step..good work..

9/30/2014 05:01:48 pm

When you meet a financial advisor for the first time, you are basically asked two questions. First one being, how much money you need in retirement and what's your risk tolerance? Based on your need and your future goals, you advisor should take proper decision.

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