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Financial Success
How to Work with Your Investment Advisor
If you’re working with an investment advisor, chances are you’re probably not an expert on investing yourself. This can make it tricky to figure out whether the person you’re working with is doing a good job – or even what their job is supposed to be.
If you feel like you’re in this situation, don’t worry. In this post, we’ll break down the role of the investment advisor and some red flags to watch out for so that you can get the most out of your investments. First…
What Is An Investment Advisor?
Investment advisors are not just “order takers” (well, at least, the good ones aren’t); they can provide you with sound investment advice and strategies to meet your financial goals.
To do this, an investment advisor will aim to discover your personal, financial, and risk tolerance profiles to identify investments and strategies suitable to your unique needs.
That’s what you might read on a bank’s website anyway.
However, in reality, many advisors simply receive a form with some basic information about your investment preferences and do not look into your financial situation any further.
What this means is that you will likely get cookie-cutter investment advice that doesn’t consider the big picture of your finances (combined spousal income, tax planning, personal needs, etc.). This often results in a diluted investment strategy that doesn’t benefit you as much as it could – which is a shame, right?
This is often how things play out at larger financial institutions, where advisors have no particular interest or incentive to provide highly personalized plans to their customers. A lot of people echo this experience when we ask them about their previous interactions with investment advisors.
At Clarity, we spend much more time with you to comprehensively assess your whole financial situation—not just your investments—including long-term and short-term goals. This allows us to build a tailored plan of action that breaks down key financial milestones and opportunities to support you across the different areas of financial planning.
That being said, let’s look into some red flags you might want to keep an eye out for in your investment advisor. If one or more of these apply to your advisor, it may be time to switch…
Red Flags
- They don’t ask any in-depth questions about your financial situation, goals or business
- They don’t seem prepared for meetings
- They make you feel unimportant
- They don’t take notes or follow up after meetings
- They let you lead the relationship
- They don’t talk to your other advisors or work together with them to align strategies*
- They use complicated jargon that makes it hard to understand them
- There’s high turnover at the institution you are dealing with
- They are a recent grad or an entry-level employee
*This is a key missed opportunity, as we explain in this post on how to assemble your financial A-Team.
One of the main issues that tends to come up when working with an investment advisor is that you want them to tell you what to do, but many advisors want to take instructions instead to avoid liability. This creates a weird tension where it is unclear who should be leading the decisions—the advisor or the client.
That’s where Clarity comes in. We have decades of experience in helping business owners, families and individuals make smarter financial decisions, and we take a personal approach to offer guidance that fits your unique situation and objectives. Whether you need help directing your investment advisor what to do, or you simply want to switch to another advisor, we can help!
