4 Signs It's Time to Fire Your Financial Advisor (2024)

A good financial advisor acts as a fiduciary who can help you with various financial tasks such as estate planning and investing. 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 when it comes to your financial advisor. After all, they know not only everything about your finances but also your dreams and goals. While firing your financial advisor is never easy, sometimes it's necessary. From being unavailable to not keeping your goals in mind, here's a look at four reasons to fire your financial advisor.

Key Takeaways

  • You should always reach your financial advisor or at least hear back from them promptly.
  • A financial advisor should be able to clearly explain what they recommend for your finances.
  • It's important to read your financial statements every quarter and be ready to ask your advisor questions.
  • A good financial advisor will have your best financial interests at heart and articulate why they recommend one specific action over another.
  • Financial advisors should be able to help you plan for life milestones like retirement.

1. Your Financial Advisor Ignores You

The cornerstone of any relationship is communication. Without it, it's easy for things to be miscommunicated and for anger to brew, culminating in distrust. Poor communication can quickly sour a relationship, especially when money is involved, which is why a quality financial advisor will lay out the ground rules in terms of how often and when they will check in with you.

If your advisor, all of a sudden, stops returning your calls or emails or takes too long to get back to you, that could be a sure-fire sign you may need a new advisor. After all, people turn to financial advisors for hand-holding, and if you aren't getting that, why are you paying the person, to begin with?

2. Financial Advisor Talks at You, Not With You

Your financial advisor has to know a lot about you, your risk tolerance, investment horizon, and aggressive or conservative nature to achieve your financial goals. They won't be able to glean any of that knowledge without sitting down and talking to you, and more importantly, listening to you.

If your financial advisor spends your meetings telling you what to do without hearing your goals, dreams, and fears, then they don't have your best interest in mind. If your financial advisor is increasingly doing that, it may be best to go shopping for a new one.

3. Too Much Jargon And Not Enough Information

Investing can be complicated and confusing for many people, which is why there are so many financial advisors out there. Not everyone is going to do a good job explaining what you are investing your money in.

Financial advisors that throw jargon your way but can't explain in laymen's terms what's going on should throw up a red flag with you. Either the financial advisor doesn’t want to or can't give you the necessary information on your investments. Either way, it's not good for you and your financial well-being.

Your financial advisor should never guarantee high returns on investments, or pressure you into investments you cannot afford. Always make sure your financial advisor is a fiduciary.

4. Investments Are Too Expensive

One of the quickest ways to see your returns diminish is to pay too much for fees and expenses. While it’s the financial advisor’s job to match your investments with your goals and expectations, they should be keeping an eye on expenses. You don’t want to end up in a situation where your advisor is steering you toward investments with a hefty commission, nor do you want to be paying an excessive amount for a fund when there is a similar investment available for less.

An excellent way to tell how much your fees and expenses are is to look at your monthly or quarterly statement. See a high amount, and it’s time to call your advisor on it. If you can’t rectify the situation or there isn’t a good reason why the expenses are so high, it’s a sign you may need to fire your financial advisor.

The Bottom Line

Financial advisors play an essential and necessary role in steering regular people into suitable investments. But these professionals are only as good as the service they provide their clients.

If your financial advisor isn’t paying enough attention to you, isn’t listening to you, or is confusing you, it may be time to call it quits and find a new advisor who is willing to go the extra mile to keep you as a client.

Financial Advisor FAQs

How Do You Become a Financial Advisor?

Most financial advisors hired by brokerage firms must have an undergraduate degree. In addition, financial advisors who want to get ahead in their career must study for, and pass, their licensing exams to obtain a Series 7 license, along with others. Experience in a specific area of finance, like investments, is important as well.

What Does a Financial Advisor Do?

Financial advisors do all kinds of work, depending on their specialty area, from managing stock portfolios to advising on taxes, estate planning, and other forms of personal finance.

How Do You Find a Financial Advisor?

There are many ways to find a financial advisor. You can start a search online, contact the National Association of Personal Financial Advisors, or ask your friends, family, and work colleagues for recommendations.

How Much Does a Financial Advisor Cost?

How much a financial advisor will cost depends on a few factors, including the type of advisor and the assets you need help managing. There are three kinds of financial advisors, fee-based, fee-only, and commission-based. Some advisors charge a percentage of the assets they manage. For example, if an advisor charges 0.3% of $50,000 in personal assets, you would pay $150 a year.

Some financial advisors charge upwards of $400 an hour, but it depends on the advisor and what you ask them to do. A financial advisor isn't necessarily cheap, but they can be affordable, not only for the wealthy. In the end, a financial advisor should help you save or grow your money.

How Much Do Financial Advisors Make a Year?

The median annual wage for personal financial advisors was $94,170 in May 2021 (the most recent figures as of May 2023), according to the U.S. Bureau of Labor Statistics.

4 Signs It's Time to Fire Your Financial Advisor (2024)

FAQs

4 Signs It's Time to Fire Your Financial Advisor? ›

Poor performance, high fees, strained communication and stagnant advice are among the reasons to look for a new advisor.

How do you know when to fire your financial advisor? ›

We've outlined some legitimate concerns that may justify a breakup and some that you may want to re-think:
  1. Poor Communication. ...
  2. Lack of Availability. ...
  3. Bad Financial Advice. ...
  4. Failure To Listen. ...
  5. Too Focused on Investments. ...
  6. Less-Than-Satisfactory Results. ...
  7. Not Worth the Money.

When should I dump my financial advisor? ›

Poor performance, high fees, strained communication and stagnant advice are among the reasons to look for a new advisor.

What is a red flag for a financial advisor? ›

Red Flag #1: They're not a fiduciary.

You be surprised to learn that not all financial advisors act in their clients' best interest. In fact, only financial advisors that hold themselves to a fiduciary standard of care must legally put your interests ahead of theirs.

How do you tell if your financial advisor is ripping you off? ›

Here are some signs you have a bad financial advisor:
  1. They are a part-time fiduciary.
  2. They get money from multiple sources.
  3. They charge excessive fees.
  4. They claim exclusivity.
  5. They don't have a customized plan.
  6. You always have to call them.
  7. They ignore you or your spouse.

What to avoid in a financial advisor? ›

If a financial advisor you previously trusted exhibits any of these behaviors, it is worth having a conversation with them or even considering changing advisors altogether.
  • They Ignore Your Spouse. ...
  • They Talk Down to You. ...
  • They Put Their Interests Before Yours. ...
  • They Won't Return Your Calls or Emails.

What happens if you fire your financial advisor? ›

Expect a Few Fees If You Fire Your Financial Advisor

In a taxable account, if commissions are high at your old brokerage, transferring them in kind to your new brokerage prior to selling can save you a lot of money. You may also owe some advisory fees, depending on your contract with the advisor.

What is the 80 20 rule for financial advisors? ›

The 80/20 rule retirement emphasizes the importance of focusing on actions that yield the most significant results. When planning for retirement, concentrate on the 20% of your efforts that will have the greatest impact on your financial future.

What to do if you are unhappy with your financial advisor? ›

Complaints about financial advisers

You can't complain to a financial adviser if your investment doesn't make as much money as you'd hoped. But if you have lost money because of bad advice, wrong or misleading information or poor administration, you can complain to the adviser who originally gave you the advice.

How often should you hear from your financial advisor? ›

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.

What is unprofessional behavior for a financial advisor? ›

Unethical financial advisors usually have warning signals including inconsistent reporting to clients, product pushing, and guaranteeing future results. Ethical financial advisors prioritize learning about your personal history, explaining unfamiliar financial matters, and planning for their succession in they retire.

What percentage should a financial advisor get? ›

Many financial advisers charge based on how much money they manage on your behalf, and 1% of your total assets under management is a pretty standard fee. But psst: If you have over $1 million, a flat fee might make a lot more financial sense for you, pros say.

Can financial advisors get in trouble? ›

They Have Significant Disclosures on Their Record

The SEC requires financial advisors to publicly disclose past criminal, civil and regulatory actions taken against them. This can range from a monetary penalty an advisor paid for an alleged regulatory infraction to allegations of criminal behavior.

How do I know if my financial advisor is doing a good job? ›

Here are five steps you can take to gauge your financial advisor's performance:
  • Step 1: Evaluate the performance of your investment portfolio. ...
  • Step 2: See if the financial advisor conducts an annual tax review. ...
  • Step 3: Check if the advisor is aligned to your risk appetite. ...
  • Step 4: Ensure your financial advisor listens.
Jan 23, 2024

Can you sue a financial advisor for losing money? ›

The short answer is yes—if your financial advisor has acted negligently or fraudulently, then it may be possible to sue them for damages resulting from their advice or actions. Advisors are held at a high standard, so any breach of trust or duty can be grounds for a lawsuit.

How do I know if my financial advisor is any good? ›

Here are four traits you want to look for when gauging whether a Financial Advisor is suitable for you:
  1. They work with you. ...
  2. They take a holistic view of your finances. ...
  3. They develop and customize your investment strategy. ...
  4. They have the support of an investment team. ...
  5. There is a lack of transparency.

Why do people leave their financial advisor? ›

Underwhelming performance is a common reason clients leave financial advisors. Your client may expect a certain rate of return, for example, and be disappointed when you're not able to produce it.

Why do people fire financial advisors? ›

Clients can part ways with their advisors due to poor communication, mismatched expectations, underperformance, lack of personalized advice, trust issues, high fees, and inadequate financial education.

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