Having to fire somebody is never a very enviable position to be in. It is awkward, uncomfortable, and might leave some bad blood between the fire and the fire. Unfortunately, it simply has to be done sometimes when the employee is both unable to perform their job correctly and unable or unwilling to improve to meet the standards you hold for them. But what do you do when it’s your financial advisor who you have to fire?
Perhaps the foremost factor you must take into account with a financial advisor is that the two of you are simpatico. Namely, does your financial advisor understand what your financial needs are? Do they understand even the basics? This is something that they should know before you are even paying them money, let alone at the point where you are considering firing them. A good financial advisor should understand how much money you have, how much money you are projected to earn in a year, how much debt of any kind you have, your job security, what you intend to buy with your money, how much money you are spending on others (kids, spouses, parents, grandparents, friends, charities, what have you), and many other factors. If the financial advisor fails at even one of these, it should inspire some skepticism in their ability to properly advise you on your finances.
Another red flag that is entirely too commonly seen is a financial advisor who rushes one of their clients into a deal that may not be as good for the client. This is your money, after all, and the last thing you want to do is be too ready to just throw it around at the whims of your financial advisor, no matter how much you trust them. Any good financial advisor is going to sit you down and make sure you understand every single detail of one of their financial advisories, such that they aren’t just taking control of the wallet or the purse. Such behavior can be quite manipulative, especially in how they execute the sales pitch. The best thing to do if your financial problems are overwhelming you is to ask your financial advisor to sit you down and go through all of your assets, debts, projected earnings, etc. to get a good idea of the bigger picture. After all, the point of a good financial advisor is not only to help you spend your money responsibly but also to help you grasp what problems and boons you should expect. There are certainly going to be other factors, such as volatile financial markets, but as always, the best financial advisors will caution a client to play it safe in order to account for that instability.
You should also be highly mindful of a financial advisor who is a little too excited to “gamble” with your money, so to speak. Basically, a financial advisor who is eager to recommend you to divert your finances into a single direction. While a decision like this could certainly pay dividends if their advice turns out to be correct, the chance that the advisor’s information turns out to be misguided is not a risk that you can afford to take with your investments. The best way to have some financial security in investments is to diversify your investments. Instead of having to hope for one investment to go big or go home, a good advisor will spread these investments out, especially in lower-risk areas. Ultimately, if your advisor IS trying to put your money into one investment, you may even have to consider that they have a financial benefit associated with convincing you to do this, so be wary.
You should also be wary if your financial advisor is not exactly being the most forthcoming, they can be with your financial information as it gets updated. When this happens, it is usually going to be between two reasons why. The first reason is simple incompetence. I.e., the financial advisor did not think to advise you of these changes (ironic for an advisor to fail to advise, no?). In this case, you would want to drop them simply because they were not performing their job well. The second reason is that they are trying to keep from you exactly how poorly your financials are going under their advice, namely because they do not want you to fire them. They may figure, hey, what if they don’t even think to ask? Never simply trust that your advisor is going to do the right thing with your money — always ask what’s going on (within reason, of course). A good rule of thumb for a financial advisor is for them to give their clients both quarterly and annual reports on the status of their financials, something you can easily look at to get an idea of how things are going. If they fail to do that much, then they likely are going to fall into one of those two camps and should be dropped like a bad habit.
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