Warning Signs: Is it Time to Find a New Investment Professional?

By Jeremy Sorci | October 18, 2015

Recently, a client asked how to recognize the best time to change investment professionals. We know that the need for a trusting relationship based on confidentiality and specialized attention is paramount, and a client-advisor relationship that doesn’t meet these standards should be re-evaluated.

Jeremy Sorci is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyThat said, there’s no black-and-white answer to this question – as change for change’s sake alone isn’t always a good idea – but there are a few signs that point to the need for a new financial advisor. Here’s how to know when it’s time to seek a new wealth advisor.

1. Wealth Advisors Put the Client’s Best Interests First


Let’s face it -- many investment professionals have a reputation for being sales-oriented and self-serving. And while each financial advisor is different, where there’s smoke, there’s fire, as the old saying goes.

The unfortunate truth is that many are limited by their firm's requirement that they sell investment a particular product, or they're driven primarily by sales goals or the promise of perks and commissions. Both scenarios may lead them to put their own interests above their clients' best interests.


Work with a wealth advisor who is a fiduciary. The law requires a fiduciary to put their clients’ interests first...ahead of the fiduciary's self-interest. In addition, choose investment management firms that charge on a fee-only basis; this will minimize self-serving investment recommendations.

Keep in mind, however, that fee only advisors still may work under the pressure of sales goals, quotas, or other bonus incentives.

2. Measure Investment Planning Performance Using the Correct Benchmarks


Many clients ask us exactly how to measure a portfolio’s performance; the answer lies in using the correct -- i.e. comparable – benchmarks, also known as not comparing apples to oranges.

Why is comparable the operative word? Because your financial advisor should not use the S&P 500 as a benchmark for a portfolio that consists of 50 percent bonds.

In fact, the S&P 500 isn’t even the appropriate benchmark for an all-stock portfolio that includes international holdings, REITs, emerging markets, domestic mid- and small-cap funds, or any other asset category outside US large-cap stocks. Instead, youradvisor should be using a benchmark that mimics the asset category make-up of your portfolio.

Is your advisor unwilling to use a comparable benchmark? Does your portfolio’s performance consistently fall short? These red flags mean it's time to re-evaluate.


Work with a fee only financial advisor who measures your portfolio performance based on comparable benchmarks that represent the asset classes you’re invested in and that measure you against the entire market.

In addition, choose an advisor that reports performance regularly; at minimum, they should provide you with an annual performance review. However, a good advisor will provide performance updates as often as you request them.

3. Wealth Strategies: One Size Doesn’t Fit All


When it comes to investing, the one-size-fits-all approach just doesn’t work. Pay attention to the questions your financial advisor asks. Expect standard questions -- How old are you? How much value in assets do you have? Do you have children? -- but if it ends there, that indicates a problem.

An effective advisor will ask specific questions to learn about a client’s unique situation. These may include: Are you comfortable with the risk associated with the stock market? Have you completed your estate planning? Are your beneficiaries in a position to responsibly inherit assets? What do you expect your cash needs to be next year?

Jeremy Sorci is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyIf you’re handed a cookie-cutter questionnaire and told to trust a professional’s judgment, it’s time to rethink the relationship. An investment portfolio must be designed around a client’s specific and unique goals and needs.


Work with a wealth advisor who meets and speaks with you personally. If your advisor’s questions don’t seem tailored to your goals and situation, it’s time to move on.

Above all, the key is to find an advisor that’s right for you -- and with whom you can comfortably develop a trusting relationship. While these criteria should be considered a starting point, ultimately you are the only person who can tell whether you’re due for a change.




Posted in Financial Planning, 401(k) Retirement Plans