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How often did your financial advisor contact you in 2020? How frequently did he or she call to see how you were doing, provide proactive guidance, or advise you on new opportunities, including those available under the CARES Act? If the sound of crickets is the only thing that comes to mind, it might be time to consider a change.
While frequency of communication may not be reason enough to split from your advisor, it can be an important indicator about the status of the relationship. That’s because your relationship with your financial advisor is one of the most important relationships you will forge over your lifetime. A trusted advisor who takes the time to get to know and understand you and your goals can make a tremendous difference in the quality of your life now and in the future.
While breaking up with your advisor can be hard to do, below are five signs that it might be time:
1. Communication is inconsistent or one-way.
Do you consistently find yourself reaching out to your advisor or waiting hours or days for a response to your questions? A lack of proactive service and/or slow response times can speak volumes about the value that your advisor places on the relationship. Strong communication is the foundation of any good relationship. When it comes to your professional advisors, you need to be able to rely on them for access to the information you require, in timely manner, to make critical decisions that impact your life, family, career or business.
2. They just don’t get you.
How well does your advisor really know you? Do they understand what you’re trying to achieve in your life? What keeps you up at night? What brings you joy? Does the advice you receive come across as cookie-cutter or simply not a good fit for your needs or goals? If your advisor didn’t take the time or make the effort to get to know you in the early stages of your relationship—guess what? It’s not going to happen now.
3. You still don’t know how they get paid.
If you’re unsure how your advisor gets paid—ask. If you’re even more confused by the answer you get—think twice about continuing the relationship. Understanding what you’re paying for, how you’re paying for it, and what you should expect to receive in return is fundamental to a relationship built on trust. If your advisor cannot or will not clearly articulate how they’re paid in terms that you can easily understand, something is not right.
4. You’ve outgrown them.
Yes, you can outgrow your advisor. It’s actually not hard to do if advisors aren’t taking the necessary steps to continually enhance their offerings, technology capabilities and service delivery models.
Does your advisor offer a full suite of resources to manage the increasingly complex challenges you will encounter as your wealth grows? It’s hard to over-emphasize the importance of having access to a team of financial professionals and specialists working together to meet your needs. That’s because no matter how much experience or how many credentials an advisor brings to the table, financial management requires a multi-disciplinary perspective and approach. Yet how the team is structured—whether it’s a cohesive in-house team or a single advisor with strong strategic partnerships in place—
is not nearly as important as how efficiently and effectively those resources can be leveraged for your benefit.
5. You can’t articulate the value they bring.
While the S&P 500 closed out last year at a record high, 2020 was unquestionably a year of wild swings for the markets. If the value of your portfolio was up at year end, was it because your financial advisor worked closely with you throughout the year to help you manage portfolio risk and capture new opportunities? Or was it simply the fact that a rising tide tends to lift all ships? Knowing the difference can make all the difference. As many investors learned in March of last year, simply riding a rising market tide can set you up for a larger fall than necessary the next time the markets correct. That’s because investment risk must be continually managed through regular portfolio rebalancing and tax-smart investment strategies to help ensure your portfolio is adequately diversified and your asset allocation remains aligned with your risk target.
The value your advisor brings should also extend well beyond the value of your investment portfolio to inspiring confidence in the future you desire for yourself and your family. That begins with identifying your goals and putting a long-term plan in place to pursue them. Your plan should reflect what motivates you and what you’re most passionate about in life, as well as your concerns and fears.
If you’re still unsure whether you’re working with the right advisor or team, ask yourself the following questions:
- Are your advisors using all of the tools at their disposal to help you plan for your financial future?
- How do they help you prepare for challenges or unexpected events you may encounter that could derail your plans, such as a job loss or sudden illness?
- Are you provided a single point of contact for coordinating the advice and services you receive across multiple financial disciplines?
- Do you have direct access to financial specialists if you have questions or concerns?
- Does the advice you receive consistently reflect the collective knowledge and experience of the full team?
- Most importantly, does your advisor serve you in a fiduciary capacity, ensuring that the advice you receive always places your interests first?
To learn more about what you should expect from your advisor, download our free guide: 10 Questions to Determine if Your Advisor Meets Standards.