Choosing a financial advisor is a very important decision, and I generally recommend interviewing several advisors to find the one that best suits your needs, goals and beliefs. Not all financial advisors are right for you, and that’s okay. Each person is different and has unique needs.
However, you’ll want to trust your instincts and avoid a financial advisor who sends you red flags. Here are some of those red flags that I would encourage people to avoid.
Talk about himself.
When talking to a financial advisor, especially when interviewing a potential financial advisor, that person should be completely interested and curious about your life, work, family, and what’s important to you. It shouldn’t be about them.
If you sit down with an advisor and they immediately start talking about the return on investment they will bring you, you should cut and run.
Ultimately, a computer can design a portfolio to earn you a return. The math is the easy part of the job. What you are really looking for is someone who will not only be an empath and a sounding board, but someone who will be your advocate.
Your advisor should know you well enough to help you make life’s big decisions and guide you on your path to financial independence and, ultimately, creating a legacy.
Work for a proprietary finance company.
When someone works for a financial company that sells their own product, there is an inherent potential conflict of interest between their relationship with their employer and their client.
I’m not suggesting that you never work with any of these professionals or that they can’t be good advisers, but you should be careful with their suggestions. If you hear anything that starts to sound like exclusive home cooking – a sales pitch for a product made by their company – that’s a red flag. They may be looking for a sale, not what’s in your best interest.
A counselor in a hurry.
Avoid any financial adviser who is more eager than you to start your relationship. Having a sense of urgency isn’t a bad thing in and of itself, but in the end, it’s your money. It’s your plan. It’s your financial life and you need to be comfortable. The moment must be yours.
Of course, sometimes it takes a good level of incentive to get things done. Some people are procrastinators and will never get the necessary paperwork done without being hassled. But you need to set these parameters. Tell your counselor that you work eighty hours a week and may occasionally have to be harassed. It is very good. It’s up to you.
However, if you’re in a situation where they say you need to act now, like they’re about to sell financial plans and you’re going to miss out, that’s a major red flag.
Delays exist, whether it’s filing a tax return, changing beneficiary designations, or taking action before reaching a certain age or the end of the year. None of these deadlines would encourage immediate action with a new advisor, especially when meeting them for the first time.
When interviewing a financial advisor, know the right questions to ask and if you feel uncomfortable, it’s time to step aside. One size never fits all, so be sure to make the decision yourself and not commit to an advisor just because of a rating or recommendation. This is a professional relationship that should last for years, so take the time to talk to several advisors until you find the right one for you.
The views expressed in this commentary are those of the author and do not necessarily reflect those of Kestra Investment Services, LLC or Kestra Advisory Services, LLC. It is for general information only and is not intended to provide specific investment advice or recommendations to anyone. It is suggested that you consult your financial professional, lawyer or tax advisor regarding your personal circumstances. Comments regarding past performance are not intended to be forward-looking and should not be taken as an indication of future results.
Securities offered by Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment advisory services offered by Kestra Advisory Services, LLC (Kestra AS), a subsidiary of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.
Investor Disclosures: https://bit.ly/KF-Disclosures