9 Signs You Need to Fire Your Financial Planner


In tough economic times, financial planners are on the front lines. They are the gateway to investment returns when the markets are good, and are the buffer against financial disaster when the markets are bad.

When I was in the financial planning business and markets experienced corrections of sorts, my colleagues and I would brace ourselves for something called “statement shock." Clients would receive and open their quarterly or monthly statements, and regardless of whether they were keeping up with the news of market performance and understood the circumstances, they would experience a certain degree of shock when they realized how their own dollars and cents were affected.

There were three possible outcomes from this onset of statement shock:

  • They would realize that it is a function of the markets and not the planner and stay the course.
  • The would call their financial planner for some reassuring words of encouragement and possibly ask for a meeting to devise a new action plan.
  • They would look for a new financial planner.

I was lucky. Most of my clients fell into categories one and two. I worked hard to educate them, work within their tolerances for risk, and was there to hold their hands when they needed it. This also usually put me on the receiving end of new clients who were in category three and displeased with their old financial planners.

But in times like these, when terms like “Meltdown Monday” and (sshhh…the “R” word) are being tossed around, financial planners around the world are waking up in the middle of the night in cold sweats. Try as they may to buffer their clients against market downturns, statements will look bad. And they will be sure to hear about it. And ultimately through no fault of their own, they will lose clients.

Some planners though, will lose clients, and arguably deserve to. They will not have performed the proper amount of due diligence with their clients by assessing their investment personalities and time frames, and instead of facing the music when their clients call, they may instead choose to hide under their desks as a way to weather the storm. They will not have addressed their clients’ larger financial situation and dealt with issues like taxation, short and long term savings, and estate planning, and will instead have simply focused on returns – something which can never be promised and will never be predictable (unless you are invested solely in term deposits, in which case again I would suggest the advisor’s incompetence).

If you are experiencing statement shock, or are wondering if your financial planner is up to snuff, here are nine signs you may need to fire your financial planner:

They never ask you about your personal goals before recommending investments

There is no such thing as a one-size-fits-all investment plan. Although having a standard set of investment recommendations according to your stated time frame and tolerance for risk is acceptable, they must do the initial groundwork to determine who you are and what you want from your money.

Only one company’s products are recommended

As good as that company’s products are, true diversification includes not only a range of asset classes, but also a range of investment managers. Recommending only one type of or company-labeled product indicates that the advisor is not providing truly unbiased advice.

You received no written financial plan, prospectus, or documentation

Every investment product should be accompanied by a detailed written description of the investment, including its composition, historical performance, and inherent risks and rewards. This is generally covered in the prospectus, which is a bare minimum of what you should receive. Better yet though – you should also be given a written financial plan, which addresses your personal financial situation and outlines a financial road map to reaching your goals – both short and long term.

You are pressured into making investments

Although sitting on the fence forever is an advisor’s nightmare and sometimes clients need a little extra push, undue pressure into doing something you are uncomfortable with is not right. Even if the recommendations are sound, if you get bad vibes from high-pressure sales tactics, your ability to communicate with this advisor and for them to listen to your needs is going to be problematic going forward.

Your planner’s recommendations don’t match your financial goals

You say you want to save up to buy a house, and your advisor recommends high-risk long-term investments. Something is not jiving here, and it is likely that they are either not listening to your needs, or are not acting in your best interest.

They don’t return your phone calls

With an onset of statement shock, you need to talk to somebody. Often big problems and feelings of discomfort can be alleviated with a simple phone call and a reassurance that staying the course is the best thing to do. But if you can never reach your advisor, if they pawn you off on an assistant, or if they don’t return your phone calls promptly, they are not doing their job.

They constantly change your investments

Seeing a regular list of transactions coming through may lead you to believe your portfolio is being actively managed. However a true financial planner (and not a broker, who is transaction-oriented) should be focused more on the game plan and less on making money by moving it around. It’s a “slow and steady wins the race” approach. Too many transactions may also mean that they are making commissions on each move – a sign that they are not truly working for you.

The plan given to you seems too good to be true

If it seems to good to be true, it probably is. If that tax strategy seems a little lofty, or you are introduced to a strategy that you’ve never heard of that goes in the face of everything you know to be true and legal, then you may find eventually yourself in hot water. Although the advisor may be liable, you are ultimately the one who will have to clean up the mess if your financial actions were unruly.

They tell you they can time the market

I don’t care who your financial planner is – they can’t time the market. If they call you wanting to make drastic changes based on what they think the market is going to do, run. What they should really be focused on is you, your goals, and a plan (and portfolio) that will weather the good times and the bad. Sure – small adjustments here and there may be prudent, but moving everything in and out of different asset classes is a losing game. They may get it right a few times, but all it takes is one bad calculation to lose everything you have gained.

What to do if it is indeed time to fire your financial planner

Please do them a favour and give them a call. Sometimes things are lost in translation, or a breakdown in communication is accidental. In my experience, people can be short-sighted, focusing on returns and setting unrealistic expectations based on short term performance. When the markets are booming, people expect consistent double-digit returns and forget not-so-distant times when that wasn’t the case. And vice versa: after a stretch of poor performance, the same person may be convinced that the bad times will never end and want to stash all their money under the bed, forgetting to take the bad times with the good to achieve an overall rate of return that will help them attain their goals.

By calling your financial planner and giving them a chance to explain their actions, you may be able to save the hassle of moving your accounts and starting from scratch with a new planner.

Then again, don’t stick with a planner because it is the easy thing to do. If your financial planner is the culprit of any combination of the above mentioned blunders, it is a problem that needs to be addressed and fixed – either by finding another planner, or by tuning your existing planner in.

Statement shock sucks, through and through. But don’t take your eye off the ball because of the initial shock of seeing your investments lose value. If the markets are down overall, don’t blame your financial planner; they don’t have a crystal ball. And if they pass the acid test above, then keep communicating with them and together you will weather this market downturn, as with every other downturn. The media will sensationalize every market correction and somehow identify that this is the worst, the most dramatic, or the hardest whatever since whenever. But time and time again, slow and steady is what wins the race.

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Guest's picture

Good, concise list-- thanks! The current economic situation should hopefully separate the wheat from the chaff. A lot of advisors out there have very little value-add, but in a bull market, people don't evaluate as critically. This is a great time to start cutting expenses, starting with people who mismanage your money.

However, I've also been keeping in mind that most of us haven't experienced any market like this before-- and your financial planner hasn't either. If you've got a good one who you can trust, go ahead and stick with them, review your portfolio, and see if you can cut expenses by negotiating on fees.

I also agree with the "slow and steady" recommendation-- for those who are younger. As an investment banker (luckily still with a job), I'm still getting into stocks, but at a deep discount. When I retire 50 years from now, I'll be glad I kept investing through the downturn. Long-term vision is the key... it's going to be a long haul.

Andrea Karim's picture

Thanks for this, Nora. I will keep it all in mind once I decide to choose a financial planner - maybe when the market recovers? :)

Nora Dunn's picture

@Andrea (and anybody else waiting on the sidelines until the market recovers to invest...I know you're out there) - just one quick tip: if you wait until the market recovers to invest your pennies, then you will lose out on all the growth you could benefit from if you invested right now! Sure, you may not be able to time the bottom...your money may go down in value first. But as renaissancetrophywife points out, she is still buying stocks - at a deep discount.

The idea of contrarian investing is to invest when the market goes down (when everybody else is selling), because you are sure to make a ton of cash when the markets eventually recover. Warren Buffet just threw a ton of cash into the markets...and if he's investing, I am too. 

We may be in for a bumpy road ahead. But if you believe that the markets will eventually recover (and you have the ability to ride out a long-term time frame for your investments), then you'd be crazy not to invest now! 

And if you don't believe the markets will ever recover, we've got way bigger problems on our hands than investments. instead you should batten down the hatches! Literally. 

Guest's picture

She's busy writing blogs about the obvious all day while your investment portfolio tanks.

Guest's picture

wow cpapartner dot com almost got them all

Guest's picture

I liked your article Nora. Very well thought out.

As a CFP I would say that your article is bang on.

I would add that by this point, if you haven't already moved to cash, you should hold on for the recovery. If you have been in cash, then this is the time to get into the markets. Warren Buffet invested 8 Billion dollars over the past 2 weeks. I think that he may know a thing or two about investing.

If you're not comfortable getting in right away, I would suggest dollar cost averaging in. If you're sitting on $60,000 in cash or money market, move $5,000 a month into the markets over the course of a year.

Guest's picture

I work as a secretary for a financial planner. Right now, virtually ALL of our clients are calling, and there is no way one person can reach them all for a phone call. "Reassurance" can take quite some time with some people! If you can't reach your financial planner on a day when the market is tanking, you are probably normal, and they are more likely working their way through a long list of clients to call than "hiding under the desk."

I realize that many planners only have 30 clients or so. Our practice is several times that size.

Guest's picture

There are always people who are not happy with their planner or advisor, but because of inertia, they don't move until the pain becomes too great. Many people could avoid this if they found the right financial advisor from the beginning. Our company - http://www.claroconnect.com - matches individuals to unique financial advisors- many people don't realize there are advisors who focus on divorced women, union employees, teachers, Hispanics, Socially Responsible Investing, etc. We are seeing more interest than ever before from individuals looking for new advisors.

Guest's picture

Just for information.

Thank you.

Guest's picture

While financial planners can be a great resource, you should never rely solely on them. Your finances are too important to let yourself have someone make decisions your don't understand. You worked too hard. But don't also cop out with meager returns from an average CFP. There are too many great personal finance books that are explained in layman's terms of what to do, including how much you'll need to save and earn to get you there. In the end, financial planners may know the rules and regulations, but that doesn't make them better investors. -Lee from www.cheaplee.com

Guest's picture

It sounds great!.

Thank you.

Guest's picture

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