7 red flags that signal it may be time to dump your financial adviser in 2023 (2024)

MarketWatch Picks has highlighted these products and services because we think readers will find them useful; the MarketWatch News staff is not involved in creating this content. Links in this content may result in us earning a commission, but our recommendations are independent of any compensation that we may receive. Learn more

By

comments

Rougly one in three American adults have sought the help of a professional financial advisor, according to a survey of 2,381 U.S. adults released in 2022 by Northwestern Mutual. But, of course, some financial advisers are better than others — a lot better. So we asked five pros to identify red flags that should give you pause when looking for a financial adviser to guide you toward your goals. If you see any of these seven signs, it might be time to dump your current advisor for a new one. (Looking for a new financial adviser? This tool can match you to an advisor who meets your needs.)

They talk about your portfolio, but not about your life

“Avoid an advisor who talks about your portfolio, but not you [and] your life,” says Rachel Elson, wealth adviser and certified financial planner at Perigon Wealth Management. She notes that while it’s common for people to come in asking “how much do I need to retire,” an adviser should respond by saying something like: “Tell us about your life, how you spend money, about your needs and your goals.” Indeed, she says, you “can’t answer anything like that in a vacuum. It’s important to have an adviser who understands who you are and understands the full picture of your life.”

They’re not working in your best interest

Do you understand how your financial adviser is paid and where their loyalaties lie? “A fiduciary is legally required to look out for your best interest before their own,” explains Kashif Ahmed, certified financial planner and president at American Private Wealth. Not all advisers are fiduciaries, and not all are held to that standard. This MarketWatch Picks guide gives you 15 questions to ask any adviser (including questions so you can understand their ethicial obligations to you and how they are paid), and as we recently noted, you may even want an adviser to sign a fiduciary oath.

They panic under pressure

“I think the basis for anyone to consider changing advisors following the pandemic comes down to this: did your advisor stick to his/her knitting and execute on a grounded strategy that was already in place or did your advisor thrash about in a panic?” says Dave Yeske, certified financial planner and managing director of Yeske Buie. “If your advisor panicked and exited the market or curled up in a fetal ball and went radio silent, you probably need to shop around for someone who works from a grounded set of principles and has a more engaged, proactive style.” (Looking for a new financial adviser? This tool can match you to an advisor who meets your needs.)

You have outgrown each other

“If an advisor mostly works with people with $10 million and up and is not giving you the time a day because you don’t have enough money, then they’re probably not the right fit. Same if you have a lot of money or have complicated planning needs and are working with someone doing basic stuff,” says Elson.

It also may be time to leave if “you feel that your needs have outgrown what your financial advisor is able to provide,” says Marguerita Cheng, CFP Board Ambassador and Blue Ocean Global Wealth CEO. “For example, your advisor may be focusing on portfolio management, but you want guidance on equity compensation, college strategies or Social Security claiming strategies.”

They don’t understand your values

An adviser should ask you about money values and beliefs and put together a financial plan in accordance with those, says Cait Howerton, lead financial planner and CFP at Facet Wealth. “We all have various experiences growing up, various values that are instilled with us from our environment, then as we get older, we start to determine our own values. For some, it’s charitable giving. Others, spending money on ongoing experiences. Eating out vs. eating home. Those are priorities in our life but underneath that they are tied to values, such as fun vs. predictability. If we dig a little deeper, we can typically uncover a value. And if we dig deeper than that, we can undig a money belief, what’s buried in my subconscious.” (Looking for a new financial adviser? This tool can match you to an advisor who meets your needs.)

They aren’t transparent about fees

However they choose to get paid, whether through assets under management or fees per year, an adviser needs to explain how they’re getting paid, when they’re getting paid and why they chose that particular pay model, pros say. Also beware of “free” financial advice, as it’s usually not free.

They speak in jargon that’s not relatable to you

“If they’re using a lot of jargon that doesn’t make you feel like they’re meeting you where you are. If someone is talking over you/down to you or trying to impress you with big words, not making it clear why they’re presenting a certain strategy,” says Howerton.

“It’s important they take high-level concepts and put them into words that meet you where you’re at in your financial literacy,” adds Howerton. “If someone isn’t explaining concepts that are difficult to understand, or if they’re not willing to elaborate on a particular strategy, they’re probably not a good planner for you.” (Looking for a new financial adviser? This tool can match you to an advisor who meets your needs.)