Not everyone has the time or “know-how” to manage their money on their own. That’s why personal financial advisers, and other financial professionals exist. That’s why many people hire a CPA to do their taxes. But before you hand over all your assets to an advisor, you should be aware of some common red flags. If a single one of the following warning signs come up, don’t risk your future with that advisor. Move on and find another one.
1- An unknown
With the spread and growth of the internet these days, it’s easy to create a website and promote yourself as a qualified financial advisor. You should know the type of credentials that exist and known what you’re looking for. These credentials include CFA, CFP, and CPA. Look for these when you’re researching someone to take over your financial assets. Ask the pointed questions about their credentials and what they had to do to get them.
2- Not giving you the light of day
A huge red flag is avoidance or not giving you the time of day. You need to keep in mind that an advisor works for you and only you. He should be focused on your goals and provide excellent customer service. If an advisor can’t promise even a couple meetings a year, you’re asking for trouble.
3- Too much pressure
You shouldn’t ever feel pressured when working with a financial advisor. You should feel comfortable and be able to get your point across without fear of being pressured to change your mind. An advisor should be wise, calm and hear your thoughts on investments.
4- Sounds like a salesman
When your advisor starts selling pitches for extremely risky investments or investments over your head, run for the hills. A good advisor should be focused on your goals and your risk tolerance. You should never feel pressured to buy into investments you’re not comfortable with. This is a case where you truly need to speak your mind. If you don’t, you could see serious losses in your portfolio for years to come.
This is a common one these days. It’s far too easy for financial advisors to fall prey to the lust of higher commissions. Any advisor who pushes various products or investments and tries to hide the fees associated with them is a crook and should be avoided at all costs. If at any time you feel like your advisor is hiding something, get it out in the open and confront the issue. Also, if you ever find out that your advisor is pushing a product that benefits someone else other than you, you need to seriously consider ditching the advisor all together.
In any industry, organization is key to success. In very rare instances can someone be successful without being organized. You should expect a financial advisor to be professional and extremely organized. This is a glaring issue that will lead to worse issues down the line. Find an advisor who knows how to stay organized.
7- Poor Communication
Communication is everything when it comes to interaction between you and an advisor. Financial topics are not inherently hard to understand. If your advisor is struggling to get the point across for a certain subject, you might want to look elsewhere. This could lead to other issues down the road. Skip the hassle and find an advisor who knows how to communicate as well as you do.
8- Promising too much
This is an obvious one. Everyone knows that market returns of even 8% are amazing these days. If your advisor promises more than that year after year, he’s flat out lying to you and is probably promising big things just to get your business. Stay away from false hope and go with a conservative minded financial advisor instead.
These are all warning signs that should tip you off that there might might worse problems ahead. Avoid these issues by finding another financial advisor. You have the time and resources to choose from the best. Be picky because your financial assets are at stake. Tread wisely!
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Filed Under: Personal Finance
About the Author: Jon the Saver is a personal finance writer at Free Money Wisdom. His mission is to help you succeed in your personal finance life. When Jon is not writing on personal finance, he spends time with his girlfriend, lifts iron at the gym, and plays Scrabble.