10 Signs It May Be Time to Break Up with Your Financial Advisor

The stakes are undeniably high when you entrust someone with the critical task of helping you manage your liquid wealth. This is even more true when you are nearing retirement and have more to lose. You basically get one opportunity to get it right.  

Many investors rate their financial advisor’s performance based on their results during the recent bull market. When you see your statement balances going up, that’s a good sign. You may think, “My financial advisor must be the financial expert he or she purports to be.”

However, as we invest in more volatile markets, many investors are beginning to experience serious concerns about the quality of their advisors. After all, real experts earn their money in down markets.   

Sometimes, long-standing relationships with current financial advisors have run their course, and it is time to make a change. But there is always the question: “How will I know a new advisor will be better than my current advisor?” The answer starts with trust. Do you still trust the advice you receive from your current advisor, or has that trust eroded?

Finding a fee-only financial advisor in New Haven, CT, has never been easier. Enter a few keywords in a search engine, press enter, and you will have hundreds of choices. However, a critical question remains: How do you identify the best financial advisors who are financial fiduciaries and trusted experts?

Heritage Tip: You will need an objective process that selects a new financial advisor for the right reasons.

10 Red Flags 

Deciding to part ways with your financial advisor can be a significant financial decision. Several important indicators could be the catalysts for making a change in 2024  

If you have experienced any of the following red flags, it may be time to make a change after you have seen your results for 2023.  

1. If your advisor’s recommendations consistently do not align with your specific financial objectives, look for someone who understands and prioritizes the pursuit of your financial goals.

2. If social or impact investing is important to you, but your advisor’s recommendations are not aligned with your values, consider working with a financial advisor specializing in impact or socially responsible investing in ways consistent with your values.  

3. Your financial plan should be tailored to your circumstances, goals, and risk tolerance. There may be a conflict if your advisor provides generic, cookie-cutter advice that doesn’t match your financial needs or expectations.

4. When evaluating your relationship with a financial advisor, consider the frequency and quality of communications so you are always in the loop. Nothing is worse than being kept in the dark when volatile markets are. In the worst case, your advisor disappears when the results are poor.  

Your advisor should provide consistent communications, offering perspective during up and down markets. You want an advisor who will provide proactive guidance and recommendations, mainly if the markets are producing negative rates of return. High-quality advisors may be unable to predict down markets, but they should know how to respond – the unexpected is part of the plan. 

Watch our founder, Paul Schatz, give an update on current markets.

5. While all investments carry inherent risk and no one can predict future returns, significant underperformance of realistic benchmarks should be a primary concern. 

6. Consider changing your financial advisor if you are paying excessively high planning and investment management fees. Excessive fees are a form of erosion. Every dollar of expense is one less dollar for your future use. 

A trustworthy advisor should openly disclose any potential conflicts of interest that could impact the pursuit of your financial goals. If you are not getting this level of transparency, this should raise your concerns about the trustworthiness of your current advisor.

7. Hidden conflicts of interest can lead to investment advice that prioritizes the advisor’s need for income over your need to achieve your financial goals. This conflict can impact the advisor’s advice and your results.

8. Trust is paramount in a client-advisor relationship. Any hint of unethical behavior—such as not acting in your best interest or pushing products for their benefit—should be dealt with as soon as it occurs.

9. Another red flag is advice that is more complex than it has to be. Advisors may use jargon to try to impress you with their expertise. But it also impacts the quality of their communications.

10. If you experience significant changes in your life—such as marriage, divorce, inheritance, or retirement, it’s important to know your advisor can keep up with your changing requirements. For example, when you retire, you may need an estate plan that transfers your assets efficiently and with minimal taxes and other expenses.

If you’re contemplating ending your relationship with your current financial advisor, it’s important to do so thoughtfully. For example, find a replacement before you terminate your current relationship. The new advisor should facilitate your transition. 

Moving Forward

Unfortunately, many investors experience substantial financial losses before they change financial advisors. That’s because their current advisors may have exposed them to greater risks to improve results. They may believe they have nothing to lose, but their clients do.  Watch out for advice that seems more aggressive than in the past.  

At Heritage Capital, a more defensive investment management approach is critical for safeguarding your investments, especially in down markets. Plus, we manage your assets with the utmost care as if they were our own. We are your partner who is responsible for the pursuit of your financial goals. 

As a Registered Investment Advisor, Heritage Capital is your financial consultant, and a multi-trillion dollar, brand-name firm (Fidelity Investments/National Financial Services) has physical possession of your assets. The custodian is an extra layer of protection.

Additionally, you will receive individual statements from our custodian, so you are always up to date on your investments and any changes that may have occurred during the month. 

If you’re ready to make a change for your financial future, we invite you to connect with us.