7 Things Your Financial Advisor Won’t Tell You

A financial advisor is a professional that helps clients assess their financial situation and develop plans to help them reach their future goals. Financial planners will help clients analyze and budget their cash flow, make good investments, assist with retirement planning, plan their estate, get insurance, and minimize their taxes.

The problem is that many financial advisors aren’t exactly what they seem to be. There may be a few things that your financial advisor has forgotten to tell you.

The 7 Facts Your Financial Advisor may not be telling You:

1. I’m not familiar with your entire financial situation

For a financial advisor to be effective, he or she must take the time to get to know a client’s entire financial situation, as well as their goals. A financial advisor is a professional that is experienced and knowledgeable enough to help evaluate, organize, and plan every aspect of a client’s finances. To get the best service, consumers need to look for a planner with extensive financial knowledge and experience.

2. I’m making a commission off of your investments

Many consumers are under the impression that their financial advisor only makes money by charging a fee for their services. However, in most cases, this is untrue. Many financial planners also make commission and earn special bonuses depending on their sales. This isn’t necessarily a bad thing. Unless, of course, the advisor isn’t comfortable disclosing how they are paid.

3. My paycheck is my number one priority

To become a financial advisor registered by the NAPFA or a certified financial planner, a professional must pledge to dedicate themselves to bettering their clients’ financial futures. Investors and other advisors have not taken the pledge to work for their client, not their paycheck.

4. I’m not actually certified

Financial planning takes extensive knowledge, experience, and training. To make sure that your financial advisors is qualified, determine whether they are certified. Look for certifications like Certified Financial Planner, Personal Financial Specialist, and Chartered Financial Consultant before choosing a planner.

5. I’ve had my share of unhappy customers

Most people won’t make it through their entire career without leaving at least one unhappy customer behind. However, several very unhappy customers is a bad sign. To find out about past disciplinary actions, browse through the advisor’s ADV form, which should be registered with the Securities and Exchange Commission.

6. I can’t promise huge returns on your investments

If a financial advisor is promising a certain return on your investment or advising you to invest in the latest “hot” opportunity, proceed with caution. Great financial planners are those that consistently help their clients meet the market average, increase their worth, and pay the least amount during tax season.

7. There’s a good reason why I’m recommending a certain investment and it’s not why you think

Many financial advisors don’t know everything. A planner that specializes in insurance or estate planning may not know everything there is about investing. Sometimes, planners give bad advice due to inexperience or a lack of knowledge. To find the best financial advisor, make sure that he or she has a broad knowledge in a variety of different areas.

Guest Post by AdvisorWorld

Evan’s Take:  Some of these should be obvious such that if your Advisor promises you Madoff-like bullet proof and huge returns you should get out of that office, but I believe most Advisors will explain how they will get paid, attempt to understand your situation as a whole and correctly use accreditation acronyms (or lack thereof).  I suspect so does AdvisorWorld since they are a referral service for Advisors!

11 Responses to 7 Things Your Financial Advisor Won’t Tell You

  1. In the end, noone cares more about your finances and life than you do, so you gotta do your due diligence when picking a financial advisor

  2. Those are exactly the same things my financial adviser didn’t tell me when I first started using a financial adviser.

    Then I decided to go at it alone because if there’s someone to blame, it can be me, and at least i would care! ;)

    • I know you have had some missteps with an advisor but I don’t think it is a bad idea to revisit one in a couple years

  3. Nice list.

    I was considering becoming an adivsor myself, and even took the CFP classes.

    But I didn’t have a good feeling about making commission off clients’ investments, even though I know there is fee-only planning.

    I agree with Henway that nobody cares more about your finances than YOU!

    In the end, through the coursework I guess I learned a lot about how to better my own financial situation.

    • I was thinking about taking the CFP exam. I don’t have to take the classes since I have my law degree.

      You spent all that money taking the classes without understanding the business? Rough.

  4. To go off a tad more on what Henway wrote about…

    No one cares more about your finances than you! If that is the case (and I agree 100%) and you are looking for financial/investment advice, perform your own diligence in looking for a CFP/planner capable of taking the proper time to research/probe into your finances. Interview multiple planners and take it serious. Don’t just turn it over to the first guy/gal you meet.

    • I couldn’t agree more, picking the right professional is so important. The problem is that there are a lot of different types of financial planners out there – there are pure etf guys, pure mutual fund guys, index guys, option guys, etc.

      • I know it is tough for the masses, but they have to “own it”.

        There needs to be a minimum/standard that the masses can point to. I think CFP is a step in the right direction. The new ad campaign they have going will only help.

        Anyone who uses/needs a financial planner who isn’t at MINIMUM a CFP needs to look elsewhere.

  5. Hi Evan,
    I really enjoyed reading your take on seeking financial advice. They’re out to make a paycheck, like most of the population, it’s silly to assume they only have your interest at heart.
    Thanks for the read,
    Timothy

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