Skip to main content

10 Signs You Should Fire Your Financial Advisor

By U.S. News & World Report

Financial advisors can help get nest eggs in order and keep people on course for a healthy retirement. Households that use financial advisors are three times as likely as non-advised households to have $250,000 or more in retirement savings, according to a 2014 survey by LIMRA LOMA Secure Retirement Institute.

But that doesn’t mean that every advisor is a perfect fit with everyone’s preferences, communication needs and lifestyle. In fact, here are a few indications that it may be time to find another advisor.

Your advisor asks you to do something shady. If your advisor asks you to wire money, sign a blank form or check, seeks full power of attorney or asks for a check made out to someone other than the account’s custodian, it’s time to move your money to another financial advisor. “An advisor should never take custody of your investments if they have the ability to make investment decisions for you,” said Susan Fulton, founder of FBB Capital Partners, an independent wealth management firm in Bethesda, Maryland. If you see signs of corruption, transfer your money immediately.

The firm isn’t registered with governing authorities. Ask if your advisor is a registered investment advisor and the official name of his or her registered firm. Then check either through the U.S. Securities and Exchange Commission, the state (if the advisor is small), or, if the advisor is commission-based, through the Financial Industry Regulatory Authority’s free tool for checking brokers. Also, check if your advisor has a series of disciplinary actions.

Your advisor doesn’t return calls or emails. “If you’re waiting days or weeks to hear back from your advisor, you deserve better,” says Paul Jacobs, chief investment officer of Palisades Hudson Financial Group in Atlanta. “A lack of responsiveness can be a symptom of bigger problems, including a lack of organization skills or a lack of empathy for clients.” This doesn’t mean that you hound your advisor after every quarterly earnings report. But if you feel your advisor is only reactive to your calls and isn’t thinking proactively, you may also want to look elsewhere, says Jennifer Acuff, a principal advisor at TrueWealth in Atlanta.

You aren’t happy with the compensation structure. Ask if your advisor is commission-based, gets bonuses from the firm and if the firm owns any proprietary products. In short, you need to know if the advisor makes money from what he or she sells to you. Some advisors, called fiduciaries, are mostly fee-based, compared with brokers, who slice a commission from your assets and may charge other fees. Determine your comfort zone. “Asking the simple question of ‘How do you get paid?’ can shed light on where your advisor’s loyalties are,” says Mike Jurs, director of Financial Engines in Sunnyvale, California. “Don’t worry — you’re not being rude. It’s almost expected. After all, it’s your money, and you should be sure that your advisor has your best interests at heart.”

Your advisor doesn’t explain risk. This is not a one-size-fits-all business. There should be a sit-down session before money changes hands to discuss your financial goals, what risks come with different investments and what fees you’ll be paying. If don’t feel you can disclose your full financial picture, it’s not a fit. After the initial discussion, the lines of communication should remain open. “If your advisor continually gives you vague responses to your questions on risk in your portfolio and the fees you are paying, it may be time to look for an advisor that is more transparent,” says John H. Foard III, senior wealth advisor for Hobart Financial Group in Charlotte, North Carolina.

There is a mismatch of opinions and goals. “If there is a difference of opinion on investment philosophy, time horizons or outlooks on risk, those may be common red flags that you should understand. If any of these situations rub you the wrong way, you must move on to a new advisor relationship,” says Jerry Lombard, president of the private client group at Janney Montgomery Scott in Philadelphia. Keep in mind, however, that if you have lofty and unrealistic expectations for returns, risk and fees, it can make the advisor-client relationship choppy, Lombard says.

Your advisor doesn’t have experience in the area you need. If you’re planning for retirement while also saving for your child’s education, working with an advisor who has experience in both of these areas is important, Lombard says.

You aren’t being treated the way you want to be treated. Treating you like you just wouldn’t understand things, or talking above your head and not listening to your goals is not OK. “We recently had a consumer [who transferred to us after she] felt that her advisor was not listening to her or her investment suggestions,” says Raghav Sharma at GuideVine, and investor matching service in Manhattan. “Even though she had worked with this advisor for several years, she was increasingly feeling that he had placed her in the ‘little old lady’ bucket and was condescending when it came to answering her questions. She did not feel heard or understood by her advisor, who treated her like a pile of assets and not an actual client.”

Your advisor is acting like a salesman. Promising lofty returns that can’t maintain expectations usually gets an advisor fired — or worse, Jacobs says. Some advisors get paid when your money shifts between investments, so the more churn they make by you shifting assets, the more money they make. The problem is that each shift usually costs you a fee. You should be skeptical if there is constant turnover in the portfolio generating massive fees, if your advisor is always pushing high-fee solutions or always selling insurance products as solutions, says Rocky Lalvani, who represents clients as an enrolled agent with the IRS and financial coach in Harrisburg, Pennsylvania. And some advisors offer long contracts that tie you up for years and guarantee them an income stream, he says.

Your advisor is secretive. No topic should be off limits for discussion. Financial planner Tim Plachta of Reliant Wealth Management in Austin, Texas, recalls a client who left her previous advisor because he refused to explain what she was invested in. “When she would ask him for an explanation, the only response she would get was, ‘Don’t worry — it’s invested in good stuff. It’s all taken care of.'” Always ask yourself whether you can trust your advisor with your financial future.

More from U.S. News

9 Growth Funds That Will Turbocharge Your Portfolio

8 ETFs for Investors Who Love Value

Chinese ETFs: 9 Ways to Play the Middle Kingdom

10 Signs You Should Fire Your Financial Advisor originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote