If you've decided it's time to seek out an investment advisor, here are eight red flags to watch out for when meeting with potential advisors:
1. Unclear or hidden fees. Your advisor should be upfront with you about how much it costs to work with him/her, and how they are compensated. If the person you're meeting with can't provide a clear fee structure, it might not be a good fit for you.
2. Pushing specific products or services. A good financial advisor will take the time to learn about you, your situation, and your goals before making any suggestions for your money. If an advisor pushes a specific fund, especially if it comes with high compensation for the advisor, they may not be acting in your best interest.
3. Guarantees or promises or high returns. Firstly, it is against our company policy to make guarantees and promises on investment returns, simply because we can't control the market. Secondly, investing is never a guarantee. We know that what has happened historically is a good indicator of how funds and the market will trend in the future, but past performance is never a guarantee of future gains. Your advisor should be open and honest with you about your investment's potential performance.
4. Poor communication. While no one can be available 24/7, your advisor should get back to you in a timely fashion, and answer your specific questions. The advisor's job is to ensure your investments are working for you as you agreed upon, so being unable to reach them or unable to get a satisfactory answer is a sign the advisor isn't as committed to your financial wellbeing as they should be.
5. Not a fiduciary. A fiduciary is legally obligated to act in your best interest. If an advisor is not a fiduciary, they may prioritize their own interests over yours.
6. History of disciplinary actions. No one is perfect, but investment advisors must be held to a high standard. We recommend checking your advisor's background for previous complaints or disciplinary actions taken against them. A poor track record is a good reason to find another advisor.
7. Pressure to make a quick decision. Investing for the future is a long-term venture. A responsible advisor will give you time to understand their recommendations and consider the risks and potential rewards before making a decision.
8. Gut feeling. If everything seems to be going well, but something seems off or suspicious, even if you can't place your finger on it, that's a good enough reason to seek a second opinion or pause the investment process.
The bottom line is you should understand what's happening with your money, and you should feel comfortable with the person handling your money. We would love the opportunity to talk with you about your financial planning needs. To schedule an appointment with one of our advisors, send us a message and we will be in touch.