Mistakes To Avoid When Working With Advisor

5 Mistakes to Avoid When Working With a Financial Advisor

Updated on Jun 22 2018


If you’ve hired a financial advisor, it’s important to still be proactive with your finances. Here are three mistakes to avoid to not only give you the best guidance for your money, but also give you peace of mind.

When you’re working with a financial advisor you expect to get expert guidance so that you can maximize return on your investments. However, high fees, poor communication and non-catered investment plans are common complaints from many paying customers.

Mistakes made from working with the wrong financial advisor can be stressful, not to mention time-consuming and expensive. Here are some key tips to help you avoid mistakes when working with a financial advisor:

1. Not Doing Your Research During the Financial Advisor Selection Process

It’s important to take the time to find the right person or firm to handle your finances. Every person’s financial situation is different, so you need to find a financial advisor who is capable or specializes in the service/s you desire. After all, retirement planning and financial advisement is not a one-size-fits-all deal.

Think about it: You will most likely be working with the financial advisor for many years and they will help shape your financial success. You need to understand the different financial service offerings and choose an advisor. Learn the steps you should consider during your research phase to find a financial advisor who is right for you.

2. Not Doing Your Own Research on Investments or Staying Informed

Keeping up with your investments is important. It’s crucial you stay in touch with your advisor on a regular basis and stay informed on the performance and investments in your portfolio.

Your advisor should send regular updates on your investments and provide you with the educational literature to learn about each type of investments and the fees and performance associated with them. Keep in mind that your advisor should be part coach and part teacher, and should help you make sound financial decisions.

Even if you trust your advisor, ask good questions. If the answer comes back with too much technical jargon, ask for clarification. Don’t be satisfied with a foggy or vague answer. It’s important to work directly with your advisor to help your finances grow.

3. Staying with an Advisor Despite Poor Rapport

If you don’t have a good relationship with your financial advisor, get out of the relationship. Your finances impact your well being and future stability, so you need to be proactive to find an advisor you not only trust, but one who is a good communicator and has a positive track record of success. Keep in mind that if you have challenges communicating with your advisor and avoid each other, your relationship will not produce the results you both want and need.

There is no ‘perfect’ advisor, but many are trustworthy and competent. Keep searching until you find someone who is a good fit and gives you peace of mind. Learn top questions to ask a financial advisor before hiring so you can make sure you find someone who is right for your situation.

4. Not Understanding How Your Financial Advisor is Being Paid

Every financial advisor has to make money somehow and the details will tell you whether they may have ulterior motives. If the business model is vague or takes more than 30 seconds to explain, that’s a red flag. You should never buy anything—especially financial advice—if you don’t understand the costs and fees.

A savvy financial advisor should explain how he or she is compensated so you understand whether there are hidden fees. Finding a fiduciary advisor, or someone who has to put your best interest first, can make the compensation conversation more transparent as they typically explain all investments and the service in full detail. Learn more about how much financial advisors cost and why you should ask for a detailed explanation of their services and rates.

5. Not Taking the Time to Set Informed Financial Budgets and Goals

Organization is key when it comes to managing your finances. Sit down and review your discretionary and non-discretionary spend, budgets and financial goals before you meet with an advisor, and with an advisor, so that you can set yourself up for future financial success.

Taking the time to take a financial snapshot gives you a necessary glimpse of your current ‘big picture’ finances. Financial awareness helps you clarify your goals and can re-energize your focus on planning for your future. Find an expert financial advisor or fiduciary today to set yourself up for financial success.


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