Look for financial planners who are fiduciaries, which means they have a legal duty to look out for your best interests. "If a 'financial planner' offers the same advice or products without tailoring their recommendations to your individual goals, that's a red flag," says Lawrence.
If your advisor is not clearly acting in your best interests (by selecting bad funds, giving bad advice, or selling lousy products), it may be time to move on.
If your financial advisor doesn't prioritize your goals, act as a fiduciary, or provide personalized service, it might be time to consider a change. Breaking up with your advisor doesn't have to be complicated: communicate clearly and let your new advisor handle the transition.
Fire Your Advisor
You can write a personal note to them, email them, or call them—whatever you feel most comfortable doing.
Visit FINRA BrokerCheck or call FINRA at (800) 289-9999. Or, visit the SEC's Investment Adviser Public Disclosure (IAPD) website. Also, contact your state securities regulator. Check SEC Action Lookup tool for formal actions that the SEC has brought against individuals.
The Rules for Financial Advisors. An essential point is that losing money alone doesn't constitute grounds for a complaint against your advisor. Markets are inherently risky, and even well-researched investment recommendations, even those considered "risk-free," can result in losses.
They Put Their Interests Before Yours
Are they recommending products that pad their bottom line while possibly not being the best product for you? You need to ask questions, understand how your advisor is compensated, and be clear on whether this results in conflicts of interest.
Common credentials are Certified Financial Planner (CFP®) and Chartered Financial Analyst (CFA). Licensing exams are needed to give different types of advice. Make sure to ask if they're certified or chartered or which exams they have passed. Ask them why they are qualified to help you with your investments.
Research shows that the top reasons people fire their financial advisor are the quality of the advice and services provided, the quality of the relationship and the value of working with that advisor relative to the cost. Many people hire a financial advisor because they want an expert in their corner.
While both offer guidance on investments, taxes and other financial matters, financial advisors generally focus on managing an individual's investment portfolios, while financial planners take a look at the entire financial picture and an individual's long-term goals.
You should meet with your advisor at least once a year to reassess basics like budget, taxes and investment performance. This is the time to discuss whether you feel you are on the right track, and if there is something you could be doing better to increase your net worth in the coming 12 months.
1 – Ask them directly: A genuine fiduciary will straightforwardly affirm their role and commitment to act in your best interests. 2 – Review the advisor's credentials: Certifications such as CFP® (Certified Financial Planner) or AIF® (Accredited Investment Fiduciary) often indicate a fiduciary standard.
Be sure to keep your financial advisor updated on any potential changes at work (especially if you plan to make any career changes), how you feel about your chances for promotion at your job, if your employer-provided benefits may be changing, what you would do if you lost your job, etc.
If your financial advisor is not meeting your expectations, it might be time for a new one. Breaking up can be hard to do. That's particularly true for your financial advisor. After all, they know not only everything about your finances but also your dreams and goals.
Legally, switching financial advisors is pretty straightforward: Sign an agreement with your new firm, and notify your old advisor.
Under certain circumstances, yes. Financial advisors are obligated to only recommend suitable investments to their clients. If the advice a registered financial advisor gives you is unsuitable for your needs, or if they have failed to perform due diligence, you can sue for negligence.