Money / Financial Planning

8 Signs You Need a New Financial Advisor

Senior couple using laptop with their financial advisor during a meeting int he office.

Drazen Zigic / Getty Images/iStockphoto

Although it’s now possible to self-manage your entire portfolio from the palm of your hand — all without paying a dime in commissions — the best way for most Americans to build successful, long-term portfolios is still to work with qualified financial advisors.

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But not all financial advisors are created equal, and not every advisor is a match for every client. If you’re wondering whether you might need a new financial advisor, see whether any of these scenarios applies to you. If so, it’s likely that you might be better off working with someone different.

Your Account Never Goes Up

Financial advisors should never be judged simply on performance; but, if your advisor consistently recommends that you buy assets that never go up, he or she is not doing you any favors. Considering there are plenty of low-cost, low-risk assets that still provide positive returns, if your advisor regularly puts you into losing investments, it’s time to find someone who can do better.

Your Balance Is Too Volatile

Your risk tolerance is a personal measure of how much volatility you can stomach in a portfolio. Even if they are generating outsized returns, some people simply can’t handle big swings in the value of their portfolios. If you’re not sleeping at night because the volatility of your portfolio is making you nauseous, it’s time to have a talk with your financial advisor. If he or she still insists on putting you in investments that you can’t stomach, it’s a sign you might need to work with someone else.

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Your Portfolio Doesn’t Match Your Investment Objectives

Just like your portfolio should match your risk tolerance, it should also meet your investment objectives. Investment objectives are financial goals that you set out for your portfolio, such as maximum growth, high income or safety. If you want to own high-flying stocks in search of the highest potential return, for example, your advisor shouldn’t insist on keeping you in Treasury bills and CDs.

You Never (or Rarely) Hear From Your Financial Advisor

Investing is an ever-evolving process. Over time, new products come to market, new commission and fee structures are invented, and the macroeconomic picture changes. All of these factors may have impacts on your portfolio and how it should be managed.

Additionally, your personal life is likely to change frequently, whether you take a new job, move, get married or divorced, have children or want to buy a home. In order to incorporate this multitude of moving parts, a good financial advisor is in constant contact with his or her clients. Yours should be doing the same.

Your Advisor Makes (Unauthorized) Trades on Your Behalf

It’s pretty rare when a financial advisor makes unauthorized trades on behalf of a client, but it does occur. Obviously, this is one of the biggest red flags when it comes to determining whether you should work with a new financial advisor. It’s one thing if you sign a letter of authorization directing your advisor to manage your account, but it’s entirely different if your advisor takes things into his or her own hands and makes trades without your consent.

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Your Advisor Doesn’t Coordinate With Your Other Financial Professionals

In addition to working with a financial advisor, you may very well employ an accountant, a tax or estate attorney, an insurance agent or any number of other financial professionals to assist you with your wealth management plan. It’s imperative that all of these experts talk to each other and are on the same page regarding your financial plan. If your advisor isn’t readily available to talk with these outside experts on a regular basis, you might consider looking for another one.

Your Advisor Charges Excessive Fees

For decades now, fees in the financial services industry have been trending down. Zero-commission trading apps are the most obvious evolution of this trend, but most other fees, from mutual fund service charges to hedge fund management fees, also have been generally decreasing. If your financial advisor still charges excessive fees — or has been increasing fees on a regular basis — it’s time to find a more cost-effective advisor.

Certainly, financial advisors who are doing their jobs well should be paid for their services; but, if your fees have been increasing and your advisor isn’t servicing your needs, it’s time to move on.

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You Simply Don’t Trust Your Advisor

Probably the most nebulous reason for getting a new financial advisor — but perhaps the most important one — is that you simply don’t trust the current one. Whether your advisor has engaged in suspicious behavior or you just have a vague, uneasy feeling about him or her, you can’t place your financial life into the hands of someone you don’t trust.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.

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