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Is It Time To Find A New Financial Advisor?

 

Your advisor promised to help you meet your financial goals. In the beginning of your relationship, the phone calls and meetings were frequent, but in the past couple of years as the market and your portfolio decreased, you haven’t heard from your advisor. Maybe, you gave them instructions to sell certain investments and they have refused to or else forget to do so. Now, perhaps the only time they contact you is when they are trying to sell you a product. Are you tired of conflicts of interest your advisor and/or his or her firm has when providing you with advice? Do you enjoy hearing that your brokerage firm recommended stocks that they underwrote that were extremely overrated or now the brokerage firm’s executives were taking kickbacks or making preferential deals for their executives and for their better clients?

Incompetence is also a disease that affects one’s net worth. If your stockbroker or advisor is from a brokerage firm or a bank, have they recommended only their firm’s mutual funds (a large conflict of interest)? Perhaps a few years ago they recommended very expensive growth type stocks and kept telling you to hold on as the market continued to drop (a sign that they don’t understand investing fundamentals). Do they explain to you in detail investing issues such as asset class and market valuations, what interest rates are doing and what legendary investors such as Warren Buffett and Bill Gross are saying? Or are they just saying buy and hold. If the later is true without mention of the former, then it is probably the sign of an unsophisticated advisor. The same would be true of someone whose only answer is to place your money with a money manager, also known as a private manager or separate account managers.

Let’s discuss performance for a moment as well. If your portfolio dropped 20% or more from the beginning of 2000 to the end of 2003, you had a poorly constructed portfolio. While most advisors lost some monies, a loss exceeding 20% was excessive.

Advisors who recommend mutual funds from only one mutual fund family or sells only variable annuities, lack sophistication. No single mutual fund family or annuity can provide all the solutions. Most fund families are not good at everything. Even the larger more well known names, specialize in certain types of funds.

Even worse than incompetence or limited product offerings, are advisors who are out for the quick kill when it comes to their compensation. They only recommend products that are highly commissionable.

Here are examples of sure signs an advisor is mostly product sales focused:

  1. They recommend only insurance products or have recommended buying annuities inside IRAs and other retirement plan accounts.
  2. Their recommended products have back-end surrender charges.
  3. A, B, C or D share mutual funds are the only ones being recommended.

Any of the reasons mentioned in this article are good ones for finding a new advisor. The best solution is to find a financial advisor who is competent and trustworthy, one on whom you can depend for professional advice and who is eager to have frequent contact with you.

Next month: How To Find A Great Financial Advisor!

There are numerous ways to evaluate an advisor. Make a list of the criteria you require in an advisor. The criteria can include; professional investment and financial planning experience, investment performance, compensation structure, credentials, frequency of contact and willingness to develop a long-term fulfilling relationship for both parties. Furthermore, does your advisor have investment research capabilities, using such computer software programs as Bloomberg and Morningstar to analyze private equities and mutual funds?

Evaluate your advisor by asking yourself the following questions. Does your advisor contact you less than monthly? Does it take more than 24 to 48 hours to return your phone call? Is your advisor employed at a full service brokerage firm (In other words they are fraught with conflicts of interest)? Is your advisor a bank that primarily recommends its own products and lacks imagination (by recommending only large U.S. stocks and/or bonds) when it comes to managing your portfolio? Does your advisor provide investment tax planning as well as the cost basis on your securities in addition to the investment gains and losses to report on your income tax return as a routine part of their service?

Furthermore, does your advisor provide you with comprehensive financial planning services, such as income tax planning and projections, education funding planning, retirement planning, survivor planning, employee stock option analysis, estate plan document reviews and if applicable, philanthropic guidance. Does your advisor perform analysis of all your property and casualty (auto, homeowners and umbrella liability) insurance? If the answer to most or all of these questions is no, then you need to rethink your relationship and begin searching for a new financial advisor.

For further information, contact Diane M. Pearson, CFP™ at (412) 635-9210 or e-mail her at legend@legend-financial.com.



INDEX
  • Watch Out For ''Grandparent Scams''
  • Tune Into The Tax Break For NUA
  • How You Can Manage Risk Aversion
  • When To Disclaim An Inherited IRA
  • IRS Reveals The ''Dirty Dozen'' Tax Scams For '17
  • Timely Tax Angles To Dividends
  • 7 Financial Steps Forward In A Second Marriage
  • IRS Applies IRA Rollover Limit To Coverdell ESAs
  • Seek The Comfort Of A Pet Trust
  • Mutual Fund Sell Downs And Other Unintended Consequenses For Investors:
  • What's The Truth About Probate?
  • Britain Votes To Leave The European Union, Surprising The World
  • Five Big Tax Penalties To Avoid At All Costs
  • 5 Reasons To Amend Your Estate Plan
  • Top Court Mandates 401(k) Fee Duty
  • Turning Up The HEET For Education
  • Saving For Private Or Prep School? A Tax-Smart Way
  • Here Are 6 Common Roth IRA Mistakes To Avoid
  • IRS Zeroes In On Dirty Tax Scams In 2015
  • Combine Investment And Tax Benefits In 529 Plans
  • Want To Get Your Business Noticed By The News Media?
  • Learn The Ins And Outs Of Education Tax Breaks
  • Locked Out Of A Roth IRA? Go In Through Back Door
  • How To Manage Your Tax Brackets Now And Later
  • Fill Up Tax Brackets To The Brim
  • Why Roth IRAs Are Still Red-Hot
  • Want To Get A Copy Of Your Credit Report? It's Free!
  • 5 Tips That Can Help Get Your Kids Into College
  • Reminders On Your Beneficiary Choices
  • Enter The Five Dimensions Of Federal Income Taxes
  • How Did The Federal Government Shutdown Affect The Economy?
  • SLATs Fit Through The Cracks In Estate Plans
  • The Bypass Trust: Not Pronounced Dead Quite Yet
  • When Do You Need An Appraisal?
  • 7 Major Tax Changes In The Fiscal Cliff Law
  • What Is Safe For You To Put Into A Safe Deposit Box?
  • Dig Deep Into ''Treasure Assets''
  • It's A Question Of Proper Balance
  • Tough Talk On Hardship Withdrawals
  • Stock Option Rules After Job Loss
  • Don't Put Mid-Year Moves On Hold
  • Which Retirement Funds Should You Withdraw First?
  • Is The Federal Reserve Risking Hyperinflation?
  • A Common Error In Powers Of Attorney
  • When Is Life Insurance A Sensible Solution?
  • 5 Excellent Tax Blogs And Websites
  • Knowhow On Year-End Tax Planning
  • A Once-In-A-Lifetime Estate Tax Choice
  • Set Up Your Trust To ''Fail'' On Purpose
  • Charitable Rollovers: There's Still Time
  • 7 Reasons To Update Your Financial Plan
  • Website Matches Volunteers With Non-Profits In Need
  • Trust Protector Is Useful, But Little-Known Solution
  • Tax Tips When You Acquire Software
  • Not All ETFs Are Tax-Efficient Anymore
  • The Delicate Dynamics Of China-U.S. Economic Policy
  • U.S. Government Bailouts Have A Mixed Record
  • Planning Your Retirement Using Stock Options
  • What Historically Follows Severe Economic Crises
  • Despite The Global Crisis, The World Is Getting Better
  • Will The New Silicon Valley Transform The Economy?
  • What A Difference A Year Makes In Ten-Year Returns
  • Now's A Time To Recall Financial Planning Basics
  • The Importance Of Year-Round Tax Planning
  • Federal Estate Tax Exemption... Going Up!
  • Court Ruling Limits Fee Deductions For Trusts
  • Not All Variable Annuities Have High Fees
  • Are You Putting Too Much Money Back Into Your Business
  • Credit Crunch Places Focus On Rating Agencies
  • Find An Expert In Almost Anything On The Internet
  • Beware Of Social Security Identity Theft
  • Regulatory Guidelines Update
  • Succession Planning For Solo Businesses
  • Energy Systems Scale and Timeline
  • The Oil Patch Profit Squeeze
  • Free Credit Reports Available Online
  • Don't Forget About Roth 401(k)
  • Understanding the Importance of a Fiduciary Standard
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Timber As A Liquid Investment
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • Ethanol: Salvation or Panacea?
  • Timber Facts
  • Bank Loan Funds - A Primer
  • A Primer On Managed Futures
  • REITS: A Very Good Portfolio Diversifier, But Should You Invest In Them?
  • Does Investing Internationally Still Diversify Your Portfolio?
  • Another Way To View The Current Valuation Of REIT Sector
  • Understanding Risk-Preparing For The Unseen
  • What Is Shorting Expense?
  • How Dangerous Is A Dollar Crash?
  • How Volatile Can The Stock Market Be?
  • Too Many ''Phish'' In The Sea
  • GMO 7-Year Asset Class Return Forecast Is Bleak
  • The Case For Industrial Metals
  • Identity Theft In The New Year
  • Ways To Improve The Score
  • Know The Score
  • Total Credit Market Debt (All Sectors) As % Of U.S. GDP
  • To Reinvest Or Not To Reinvest
  • Why Not Alternative Fixed Income Investments?
  • Just How Expensive Is The Market?
  • Beware of Brokerage Firms' Misconduct
  • Identity Theft : Correct Those Credit Reporting Errors
  • Risk-Controlled Investing
  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Identity Theft: Everyday Prevention
  • Identity Theft: Help Is On Its Way
  • Identity Theft: Tips to Protect Yourself
  • Identity Theft: What Documents Should You Shred or Store?
  • Identity Theft : Don't Fall For That E-Mail!
  • Identity Theft : One More Reason To Protect Your Credit
  • Identity Theft: A Note About Social Security Numbers
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • The Importance Of Commodities In A Portfolio
  • A Tale Of Two Hedges
  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
  • REITs: A Great Diversification Investment
  • What Is Risk?
  • How To Find A Great Financial Advisor?
  • Is It Time To Find A New Financial Advisor?
  • Year-End Tax Planning Can Help Generate High Return On Investment
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Traditional Investing May Decrease Your Retirement Lifestyle
  • Understanding Deflation
  • Tax Issues To Consider When Buying A Long-Term-Care Policy
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • Evaluating The Quality Of A Company's Earnings
  • Yesterday's Great Companies
  • 2001 Tax Relief Act Changes Education Planning
  • A Retirement Plan Primer After The 2001 Tax Act
  • Beware Of Common Home Repair Scams
  • Custodial Accounts: One Way To Make Gifts To Children
  • Estate Taxes To Be Reduced Then Repealed In 2010
  • Faulty IRA Conversions Can Lead To Tax Penalties
  • Many Individuals Pay Private Mortgage Insurance Beyond When It Is Necessary
  • Rethinking Estate Planning
  • Retirement Plan Contribution Limit Changes
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • Your Medical File Report May Need A Check-Up
  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
  • Five Tips For Preventing Thefts From Your Checking Account
  • Home Office Deductions: Hoops To Jump Through
  • Income Tax Effect On Single And Married Taxpayers
  • Income Tax Planning For Investments
  • Property Tax Challenges Should Not Be Overlooked
  • The IRS Will Follow Your Wealth To The Ends Of The Earth
  • When Do You Need Life Insurance
  • Year-End Tax Defferal Planning
  • Is Your 401(k) Plan A Failure?



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