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Did You Hire the Right Financial Advisor?

Category: Financial and taxes in retirement

July 15, 2019 — Hiring a good financial advisor is a difficult job for most people.  Although there is no shortage of solicitations that appear in the newspaper, come in the mail, or through a phone call – how do you know if the person who tells you they are so gifted is really that great? Someone who will look out for your interests, not cheat you, protect your hard earned savings, and actually make your savings grow.  After all, your money represents your financial security, which makes making this decision so important and so difficult.

Who Watches Your Account

A while back we profiled a number of tips for hiring a good financial advisor (see Further Reading at end). This feature will build on that and provide some tips for how to evaluate the person you hired, or the one(s) you might be considering for the job.

Seven things to look for

Trust your instincts.  Your intuitions and first impressions are always important. If you feel like you are being swept along into a decision and little voices tell you something might not be right – stop and listen. Further exploration might clear them up, but never dismiss your reservations.

Does your advisor stay in touch?  A good financial advisor does more than send you monthly or quarterly reports. The best ones reach out to meet with you to review how your portfolio is doing (successes and disappointments) and discuss options to improve performance. When the market gets scary, do they reach out and help you focus on the long term?  If you are not hearing from your advisor regularly, it might be time to look around.

Are they helping you build your financial IQ?  If your advisor puts on seminars and meetings that is a good sign that are involved in a partnership, with you as part of the decision making team. And that they are staying current with the latest developments.

Whose interest are they looking out for?  A fiduciary is someone who must act to protect the client’s interest above their own. Find out if your advisor is pledged and registered to be a fiduciary – if not, be wary. Financial advisors seem to have an endless supply of certifications and initials, but there is a difference in them. Some are more stringent than others, with a Certified Financial Planner (CFP) being one of those that require the most hours of training and qualifications.

Who’s getting paid. Financial advisors get paid in a variety of ways.  Be wary of commission based compensation structures. There, it might be in the best interest of the advisor to churn your account or invest in fee based investments (load funds) that probably don’t return any better than no-fee products. Your advisor should advise you if they receive any commissions on your behalf, if they don’t tell you – ask!

How strategic are they, and what kind of products do they recommend? You can find out a lot when you first meet an advisor. What can they tell you about their investment philosophy? If they don’t start with finding out your goals, that’s bad. If they don’t recommend an age-appropriate balance of growth, fixed income, and cash – watch out. Do they recommend rebalancing periodically?  Do they concentrate in a few, seemingly random stocks or bonds, or do suggest an approach that makes strategic sense, balancing risk and reward where not too much gets put in one basket? Be wary of fee based funds and too much emphasis on products like annuities, limited partnerships, and the like. For our money, index funds and large cap stocks and bonds are safer than taking lots of risks in companies or products you never heard of.

How to find a good advisor.  Hiring a financial advisor is tough, with the outcome being very important. So it is worth spending time finding a good one (and if your resources are high enough, maybe having two). Ask your friends and relatives for recommendations. Or successful people you know. Be wary of faint praise. Let talk with several and see for yourself.

Comments? How did you find your financial advisor? We would love to hear how you did, and if you are happy. Please share any tips that would help others in this difficult task in the Comments section below.

For further reading:

Should You Hire a Financial Advisor, or Manage It Yourself
How to Retire on a Lot Less Than $1 Million

Beware Those Steak Dinners

Posted by Admin on July 14th, 2019


  1. I found a great financial advisor at a retirement expo. He is a fiduciary advisor.

    by Chris — July 15, 2019

  2. Yes. Someone I can trust. Me.

    by Peder — July 15, 2019

  3. …and like a good Dr. you want someone YOUNG! That way you don’t have to change in mid-stream, so to speak 🙂 We use two different groups ( I have read too many stories about someone duping folks out of their life savings) so, we have our money split. Both Thrivent Financial and Prudential began as life insurance companies and we have grown with them since the 1980s. They get paid by their employers but don’t charge us directly.

    Our favorite Rep is in his 30s and has discussed options at length with us, how to protect our investments. The package we designed has steadily grown – even when the overall market is down. I have some personal investments that I have made on my own but our bottom line has been very stable. He has also been taking care of a friend who recently found herself facing divorce. He has patiently walked her through her options and helping to her to face independence.

    by Flatearth6 — July 15, 2019

  4. Found our’s through a recommendation. We interviewed him and discussed our plans for retirement and how much risk we were willing to take. He put together a plan that fit our needs and gave us a chance to change or discuss it before signing up with him. We liked what we saw and gave him a third of the portfolio to see how he would do. Well fast forward and he now handles all our investments and since retiring at 60 our portfolio has increased year after year even with our monthly draw from the IRA.
    He is paid a percentage of the portfolio, it goes up he gets more goes down less. He flys to see us twice a year and always available if we call. He cannot make a trade without emailing us or calling as to why we would make the change. Has given great recommendations on tax advisors, long term care and a trust for our autistic grandchild.

    by Bruce — July 15, 2019

  5. Why beware of annuities?

    by Vincent DeBiase — July 17, 2019

  6. Good question Vincent. Nothing wrong with annuities per se. In fact, most people would be better off if they had some of their resources put into annuities, which can offer a guaranteed return. The problem with them would be an overemphasis on annuities, particularly if they carry high fees, unusual terms, or pay commissions to the representative. Annuities differ in quality and terms, be sure to do your homework before you sign on the bottom line.

    by Admin — July 17, 2019

  7. Some of us remember the crash when many annuity companies filed for bankruptcy in the 80s, wiping out some people’s savings. There have also been many warnings over the years about excessive commissions and sales or management fees hidden in annuities. Actuaries who determine the benefits that are going to be payable for investments obviously work for the companies, not the beneficiaries. And annuities aren’t FDIC or otherwise federally insured, so investors need to check the state insurance requirements for annuities in their home states (usually much lower than FDIC, SPIC etc. insurance). Annuities may be a great tool for a balanced portfolio, but do have risks. Good brief summary at:

    by Kate — July 18, 2019

  8. The Corona Virus has everyone on edge. One of my friends said he put in a sell order on all of his stocks. Others chimed in that if you are in retirement for the long haul, you should just hang in. Still others are waiting for a big decline as the time to buy. What your financial advisors would say is probably another story.

    What is your financial advisor saying? And what do you think? Are you hunkering down with your portfolio, or are you getting nervous enough to think about selling? Or did you already?

    Let us know!

    by Admin — February 27, 2020

  9. I am sure on edge about my investments after the losses of this week. I wS told to stay the course, but at this point, I am not sure what to do. I have a gut feeling this is going to get worse before it gets better. I am very worried now.

    by Maimi — February 28, 2020

  10. It was amazing watching the run up over the past months so we were expecting some sort of correction but how weird to see the Dow at an all time high one day and a couple of days later be in free fall. Hopefully our investments are diverse enough to handle the dip. We’re sitting tight while we watch the news with our thumbs in our ears and fingers across our eyes.

    by Jean — February 28, 2020

  11. We’re staying the course with primarily balanced funds, although those too are taking a hit. Glad they raised the mandatory distribution age to 72 1/2, though. Tough times for folks who have to withdraw now.

    by Staci — February 28, 2020

  12. I don’t have a financial advisor but I do subscribe to several stock advisory services. So far, the services are saying to hang in there on their recommendations as the underlying value of the companies haven’t changed in the last couple of weeks and the investments are for the long haul. However, after the markets reached new all time highs several weeks ago, I sensed that things might be getting overvalued and I put stop loss orders in on all my holdings. I made the sell points rather tight relative to the then current share price and about half of my holding have stopped out. So I have a lot of cash in my account and I did use the sell off to pick up some new stocks or add to my current positions. Specifically, I bought some Chinese e-commerce and social media stocks that are cheap now but will shoot back up once the panic is over.

    by LS — February 28, 2020

  13. I am my financial adviser. I have not trusted this market for the last 6 months and took a 75% cash position in January until after the election. I did buy this week. But, it still could go down more before it turns back up. No time to sell. The next 30 days will be most telling regarding the virus, but the next year will show the real impact to earnings as a fallout to what is happening now globally. MHO.

    by ljtucson — February 29, 2020

  14. “Stay the course” (at least until we get out…)
    I think this time will not be a quick bounce back. The Covid-19 deal is just a match lighting the tinder left by the Fed (and central banks worldwide) with their artificial 5,000 year low interest rates. It will all catch up now to real economics. If there is a quick bounce once the Fed cuts rate again next month (or in advance), it may be the last time to sell for a long while. I sold a lot about 2 weeks ago, but not nearly enough. First time I was scared out at the top instead of the bottom.

    by Peder — February 29, 2020

  15. Re. annuities, nothing wrong with them in principal (though the percentage the sales schmuck gets off the top is exorbitant), but these days, if an insurance company promises, say, 3-4% and can only buy bonds with a coupon of 1.5%, that leaves them starved for yield and drives them to ever riskier investments. Around 50% of the corporate bond market is BBB (the lowest investment-grade) and companies line up for them because of a fractional increase in yield. I imagine these days there are plenty of annuity managers who are sleeping even worse than you are. Also, not government guaranteed, if that’s important to you. Commissions on index annuities can be as high as 8% (money lost up front) and surrender charge terms as long as 15 years.

    by Peder — February 29, 2020

  16. This is NOT the time to sell. Look at the crash of 2008 and how the market rebounded. Unless you must have the cash to pay for a wedding or something like that, hold on. I’m not saying the market won’t continue to go down, but at this point, the selling opportunities are over. Wait for the market to rebound. Even if it takes years, it will do so. Selling at a low point in the market is the worst thing investors can do. To quote my father, “This too shall pass.”

    by ella — February 29, 2020

  17. Thanks, Peder. I also am not a fan of annuities. Most have page after page of conditions and terms that many are not familiar with and which can hide major costs including those you mention. A super nice salesperson will explain it to you — accurately you hope. I also appreciate the comments you made about investment quality. I had not thought of that.

    by Self — March 1, 2020

  18. I just met with my advisor, and I must admit, I have been panicked. She has been taking stuff out of the market and converting to cash for several months, so I am good there, but my first thought was to pull it all out of the market, convert to cash and stuff into my mattress. Of course, my advisor did not think that was the way to go! The last pandemic was influenza in 2009, and I do not remember there being such a run on the market at that time. Is everyone scared because of the virus’s economical implications as well as it being an election year? I never thought the market could sustain 29,000 – we just do not have the manufacturing or infrastructure to support in, in my opinion. So, what is one to do?

    by Lynne — March 1, 2020

  19. Because this question has generated so many interesting comments, we have used them to create an entirely new Blog article to get wider distribution. Please see

    If you have Comments on your response to the Corona Virus, please make them to that Blog instead of this one. All of the Comments made so far on this one have been copied over to the new article. Thanks

    by Admin — March 1, 2020

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