Choosing a financial advisor is a very important decision, and I usually recommend interviewing multiple advisors to find the one that best fits your needs, goals and beliefs. Not every financial advisor will be a good fit for you, and that’s okay. Everyone is different and has unique needs.
However, you’ll want to trust your instincts and avoid a financial advisor who is sending up red flags. Here are few of those red flags that I’d encourage anyone shy away from.
Talking about his or herself.
When you talk to a financial advisor, particularly when you’re interviewing a prospective financial advisor, that person should be completely interested and curious about learning about your life, your work, your family and what’s important to you. It should not be about them.
If you sit down with an advisor and they immediately start talking about the return on investment they’ll get you, you should cut and run.
At the end of the day, a computer can design a portfolio to earn you a return. The math is the easy part of the job. What you’re really looking for is someone who will not only be an empath and a sounding board, but someone who’s going to be an advocate for you.
Your advisor should get to know you well enough to help you make the big decisions in life and to help guide you on your path to financial independence and ultimately to creating a legacy.
Working for a proprietary financial company.
When someone works for a financial firm that sells its own product, there’s an inherent potential conflict of interest between their relationship with their employer and their client.
I am not suggesting to never work with one of these professionals or that they cannot be good advisors, but you should be vigilant about their suggestions. If you hear anything that starts to sound like proprietary home cooking—a sales pitch for a product created by their company—that’s a red flag. They may be looking for a sale, and not for what’s in your best interest.
An advisor in a hurry.
Avoid any financial advisor who is in more of a hurry to have your relationship begin than you are. Having a sense of urgency is not a bad thing in itself, but at the end of the day, this is your money. It’s your plan. It’s your financial life and you need to be comfortable. The timing must be yours.
Of course, sometimes there’s a healthy level of prodding needed to get things done. Some people are procrastinators and will never get the necessary paperwork handled without some nagging. But you should set those parameters. Telling your advisor that you work eighty hours a week and may need to be harassed at times. That’s fine. That’s your choice.
However, if you’re in a situation where they’re saying that you need to act now, as if they’re about to sell out of financial plans and you’ll be missing out, that is a major red flag.
Deadlines do exist, whether it’s for filing taxes, changing beneficiary designations or taking an action before reaching a certain age or the end of the year. None of these deadlines would be cause to take action immediately with a new advisor, especially when first meeting them.
When you’re interviewing a financial advisor, know the right questions to ask and if you’re feeling uncomfortable, it’s time to walk away. One size never fits all, so be sure to make the decision for yourself and not commit to an advisor simply because of a rating or recommendation. This is a professional relationship that should last for years, so take the time to speak to multiple advisors until you find the one that makes you comfortable.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regards to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.
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