Conventional wisdom tells us to watch out for high commissions—a big red flag—and conflicts of interest when assessing our financial advisers. But as our work at SUM180 has shown us, there’s more to choosing the right adviser for you than keeping an eye on commissions, especially if you’re a woman. As CEO of SUM180, I have story after story of women talking about their experiences with previous financial advisers: It’s expensive…it’s condescending. And, while you may appreciate the advice you’re given, you don’t always know whether you can trust it. As one woman told us, “My husband’s golfing buddy is our adviser, and that seems to be his only qualification.”
Financial adviser Elizabeth Buffardi wrote a good post on this topic just last week, focusing mainly on the importance of good communication between you and your adviser. (You can read Elizabeth’s post here: 4 signs that you should find a new financial adviser.) Because choosing the right financial adviser for you is so important, Financial adviser Kelly Adams and I put together five more tips to help you recognize when it’s time for a change:
- Your financial adviser puts his or her needs or desires above yours. According to Kelly, this is the #1 reason you should replace your financial adviser. Instead, Kelly says, you should look for an adviser who works as a fiduciary. I agree 100%. The right adviser will always serve your best interests, not always be trying to sell you something.
- Your adviser is only interested in what assets you bring to the table. “Find someone who looks at your entire life picture and is interested in your overall well being, not just your net worth,” says Kelly. Conversely, it’s reasonable to want an adviser whose life you can relate to, so you can better trust the advice you receive is appropriate for you.
- You don’t trust your adviser enough to tell him or her everything about you financial picture. “Replace your adviser if you don’t feel you can tell them everything,” says Kelly. “The best planning relationship is just that—a relationship between the client and the adviser.” I couldn’t agree more. Listen to your instincts. Without trust and open communication, any financial advice you receive will be flawed or incomplete, at best.
- Your adviser is condescending to you. Few of us have a perfect financial history, and no one benefits from being berated for past financial mistakes. The right adviser will start wherever you are and help you build from there, step by step. Your meeting with your financial adviser should leave you feeling empowered, not discouraged. If this is not your experience, it’s time to look elsewhere.
- Your adviser is constantly trying to “educate” you about finance. Chances are, you don’t need to become a financial expert to reach your financial goals. An adviser who is constantly trying to ‘teach’ you may be emphasizing his or her own ego at the expense of helping you make progress on your goals. More helpful: an adviser who breaks down your plan into manageable steps and then gives you the tools and information you need to implement them.
What do you look for in a financial adviser – and what red flags would you add to this list?