As a financial planner, I have seen too many clients who have found LFBB financial planning after being burned by another advisor. Unfortunately, the industry is riddled with substandard advisors. I’m not talking about crooks – those are actually pretty rare. There are now numerous checks and balances to stop criminals taking clients’ money. You might read about those horror stories in the news, but that’s exactly why they make the news, because they are rare.
I’m referring to those advisors who don’t care, can’t communicate properly, over promise and under deliver, are lazy or just plain incompetent. I’ve run into those types of advisors often. The sad truth is that most people don’t know how to choose a financial advisor. Instead of a checklist about fees, qualifications, levels of service etc… I suggest you consider these five questions for your current advisor.
- Does your advisor address all of your financial planning questions?
I recently spoke to a client who had engaged with an advisor through a family friend. He had come up with a “plan” for her to retire early, which didn’t mention the State Pension. This is a huge red flag as the State pension (of which most of us are entitled to) is such a basic component of retirement planning. Why this wasn’t included I don’t know – laziness? Lack of caring? It might just have been a simple oversight, but it is difficult to swallow this reason when it is such a fundamental issue in most retirement plans.
- Are you the right client for your advisor?
Say an advisor has a long-standing client who asks them to take a look at their brother’s finances, the advisor speaks to the brother and learns he is deep in debt, has very little saved for retirement and is too disorganised to pull documents together for a plan. Unfortunately, there is little a financial advisor can do here, other than give some tips on budgeting. The advisor may take the small retirement savings of the brother and put them under management for little or no fee. Things escalate, the brother is unhappy that the advisor couldn’t turn his life around and complains – risking the advisor losing the long-standing client as blood is still often thicker than water. The brother here is clearly wrong for the advisor, he would have been better off finding a “financial coach” or seeking government advice to reduce his debts.
If you are referred to an advisor by a friend or family member, that can be a good start. However, make sure you ask if they have clients like you already. Admittedly this can be a tough situation as the advisor might make the right noises in the first place to make you feel welcome, so not to risk the relationship with the original client. Just be sure that your expectations are set out in the early days.
- Does your advisor communicate in jargon, or talk over your head?
This is an all too common problem. I have a client who is a university lecturer, who had taken interest in his own investing. He hit retirement and wanted to look for an advisor to manage his pension so he could relax a little. He and his wife met with an advisor from a large well know national firm. The young advisor spoke in investing jargon aimed entirely at the husband. The jargon speaking was a big turn off for the wife, who was a very intelligent woman but simply had no interest in investments. She wanted to be informed enough to make good decisions. Soon after, the couple became clients of mine and relayed this story to me.
Why do advisors do this? Simple – lack of personal skills. Many advisors get into the business because they enjoy number crunching; dealing with people is not really their strong suit. The role of a good advisor is built on being a “people person.” It’s a job built on listening, forming strong personal relationships and trust. Number crunching can (and often is) outsourced to paraplanners. The personal understanding and counselling element of the client facing role cannot be sloughed off.
If your advisor is not providing the service you are happy with, it is your right to find someone else.
- Does your advisor regularly update your plan?
When was the last time you had a meeting with your advisor? I meet way too many people who had a plan developed many years ago and it has never been properly reviewed or changed since, despite their life circumstances changing drastically. A financial plan should absolutely not be a “one and done” – if it is then it isn’t a plan. It’s a bunch of data that may or may not be applied.
Regular and detailed review meetings with your advisor are the key to success in financial planning. Life changes and so should plans to meet objectives. After all, this is probably what you are paying your advisor to do and should be part of the service. I wouldn’t pay for something if I’m not using it – nor should you.
- Do you feel comfortable asking your advisor questions?
If your advisor is cold and distant then they probably aren’t right for you. You should feel at ease picking the phone up, texting or emailing about any financial query (no matter how small) and you should expect a response within a reasonable timescale. As pointed out in point 4 above, you are probably paying your advisor an ongoing fee. Make them earn their corn! You don’t have to be best friends with your advisor and, in fact, an arm’s length relationship is probably more constructive, but your relationship should be amicable and easy. If you feel your advisor is “too busy” or unapproachable that’s a sign you’re working with the wrong person.
The bottom line is that you don’t need to accept substandard service. If you feel as though something is amiss or not meeting your needs then bring it up with your advisor. If you are still not happy – take your business elsewhere. Moving to another advisor is probably a lot easier than you think.
Arrange a free financial review with one of our truly independent advisers a LFBB Financial Services today. Just call 0114 272 9721.