- They aren’t me.
- They are someone other than me.
- They don’t work at Bright Road Wealth.
- They are taller than me!
Haha! Okay, those aren’t the real signs!
I see these kinds of click-bait titled articles all the time, and that’s how this non-sense reads to me. They never tell you the truth about whether you have a good advisor or a bad advisor. They just advocate change.
When 90% of advisors are overcharging clients through hidden fees, change might be a good idea.
But, here’s a better list:
1. My advisor is condescending.
I hear this all the time. A new client comes in from one of the big-box investment advisors – think tall building downtown with mahogany desks, glass-walled conference rooms, and lots of busy-looking men and women in business suits.
They are smart people who have been talked down to, or even belittled by their advisor. It almost always happens when asking simple and reasonable questions. I’ll tell you a little secret. If your advisor is being condescending, it’s probably because they don’t actually know the answer to your question, but they do know how to get you to stop asking!
2. My advisor can’t directly answer questions about fees.
This is also in the category of answers-your-advisor-doesn’t-know. It sounds absurd, but the industry is so full of hidden fees that many advisors truly don’t know all the fees you pay. Some will say that you don’t pay them at all – but surely they aren’t volunteering their time for free. Sounds “sus,” as my teenager would say!
I have also heard from several clients that their previous advisor told them they only pay the fee that was plainly written on their investment statement. Then upon further research, I found that some were paying 2-3 times that in “total fees.” I won’t list the most egregious firms, but if you want to call and ask, I’ll tell you! One well-known national firm with very nice advisors who don’t know what they charge has a 27-page fee disclosure (no exaggeration), which I once read and summarized for a very surprised couple.
3. My advisor spends more time talking in our meetings than listening.
Sometimes as a client, you really want to hear what your advisor has to say, but my goal is to talk less than 25% of any meeting.
I’ll admit, I fail frequently. I do my best to be quiet. I love listening to my clients, but they often trigger connections in my mind. I frequently share anecdotes that I hope will help them understand their situation better or make decisions easier for them.
For instance, I’m sure you’ve heard the quote “what gets measured gets managed.” The full quote, actually a summary by columnist Simon Caulkin of a V.F Ridgway paper entitled “Dysfunctional Consequences of Performance Measurements,” is “what gets measured, gets managed, even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.”
Sometimes, I stray into just plain interesting facts. Maybe that’s what I’ve done here, but let me bring it back around.
One of my friends manages a call center help desk for one of the major wirehouses – you see their commercials saying how your life is so important to them and how you should fire your advisor, so you can trade more frequently! My friend’s goal is to keep his team’s phone calls to less than 45 seconds EACH. They are measuring this and giving bonuses for people who get their clients OFF the phone within 45 seconds on average. I think that harms the organization.
We don’t have a lot of KPIs around here, but I do measure listening rate in meetings. I think that helps me be a better listener and that’s my real goal.
4. I wonder if the recommendations are better for my advisor than me. They push me towards proprietary investments.
This one doesn’t need much explanation. It’s a feeling you get when you meet with them. You are talking about one thing and they start saying something completely different. It sounds like an ad or a commercial, something like “it’s an investment and insurance” with a *DING* big smile. It brings to mind the “Common People” episode of Black Mirror, when after brain surgery the woman just stops midsentence to pitch a new detergent to her husband!
5. My advisor’s advice doesn’t respond to major changes in MY life.
Many people think financial advice should respond to market events, but market events rarely impact the life you are living today. Most of the time it’s far more important that you stick to the plan you already have, particularly during turbulent markets.
However, your advisor should absolutely be responsive to what is changing in your life.
You planned on two kids, now you are having a third. You planned to retire in 5 years, but your department gets downsized now. You planned to be married forever, but now you are getting a divorce. You were struggling to save enough to retire, and now you’ve received an inheritance. You planned to work forever, but someone wants to buy your company for three times what you imagined the offer would be! All of these should impact the advice you are receiving.
Moreover, while your advisor should be helping you see what’s most important, they should be focused on your most pressing financial goals.
6. I spend more time worrying about my finances than I did before.
In my practice, occasionally someone comes along that just will never trust me. After a few years, I recommend that they find another advisor with whom they feel more comfortable.
Sometimes it’s just a personality difference. Sometimes people have an inability to trust (other people, the market, the plan). Regardless, if they don’t trust our work together, then my work is not going to be effective and I will resign that relationship. In the former case, we have a list of other advisors we trust that I can provide, and we help them transition. In the case of the latter, it can be more difficult.
A big part of your advisor’s job is to help you feel safe in your financial decisions. If you are worrying more about your finances than you did before, and meeting with your advisor doesn’t help, it is a signal that you don’t trust your advisor. You should consider replacing them.
7. I expect better returns than my investments generate.
If your portfolio is consistently underperforming your expectations, either there is something wrong with your expectations or something wrong with your portfolio.
I don’t think “my portfolio isn’t keeping up with my brother-in-law, my coworker, my cryptobro, etc.” is a sign that you need a new advisor, though. Comparing your return to other investor’s returns is a huge pitfall. It is far more likely that 1) that these investors aren’t telling you the whole story, 2) these investors don’t actually understand their risk/return ratio, or 3) these investors have a fact pattern very different than your own.
Your advisor should be helping set your risk/return target and throughout that discussion set your return expectations. No one should be guaranteeing they will beat the market or even a specific index. There are people that do make these guarantees in order to “close a sale.” You should run away from these people as quickly as possible.
If your returns aren’t meeting your expectations, you should discuss this with your advisor. They should be able to explain why this is happening without using a ton of jargon. If you aren’t satisfied with their explanation, then you have a decision to make.
In our case, it’s common that our returns are out of sync with popular indexes like the Dow or NASDAQ. We make sure our clients understand that when discussing our investment strategy, so that they aren’t surprised.
You can even seek a second opinion. On more than one occasion, I have had to inform someone that I think their advisor is doing a great job with the portfolio they believed was underperforming.
You do have to be cautious here though, there are plenty of good advisors out there. There are also plenty of bad advisors out there, so check out my recommended list of qualifications to help you choose an advisor here!
If you are seeing some of these signs, schedule a First Time Call with one of our advisors. We’d be happy to give you our opinion.
