“I’m unhappy with my financial advisor,” a man told me. “Not only have I lost money, but I don’t feel like he knows I’m alive! Is it too much to expect that my advisor would take care of me and my money?”
This man is surely not alone in his thinking. Maybe you feel the same way?
Here’s my thought: It is NOT too much to ask that a financial advisor be a competent partner in helping you pursue realistic financial goals.
It is, however, unrealistic to expect a financial advisor to “take care of you.” Such language prompts me to mention the three common mistakes people make when working with a financial advisor.
Mistake #1: Believing everything your advisor says
You should never enter an important relationship (such as the one you have with a financial advisor) without a high level of trust.
A relationship of trust is not, however, permission for you to turn off your brain. Your advisor should be part coach and part teacher. He/she should not only help you do the right things financially, but be able to clearly communicate the reasons for any recommendations.
On your end, you’ve got to ask good questions. And if the answers you get are vague or full of technical jargon, ask for clarification. Make sure you understand why you are being advised to do certain things. And if you’ve got an advisor who bristles when you ask honest questions, that may be a sign you’ve got the wrong advisor.
Mistake #2: Believing nothing your advisor says
If you’ve been burned (or disappointed), it may take some time before you are ready to trust someone again. While that emotion is understandable, it is not profitable. Getting help requires some level of trust.
While no advisor is all-knowing and perfect, many are highly competent and trustworthy. If you keep your advisor at arm’s length, never fully trusting him, your relationship will not produce the results you both want and need.
Don’t settle for a trust-less relationship.
Mistake #3: Abdicating instead of delegating
I would estimate that 5-10% of the population has the time, training, and temperament to do their own financial planning. Everyone else could benefit from professional advice.
What you get from that advisory relationship, however, is not a full-time, “financial nanny.” Having an advisor doesn’t mean you never have to think about your finances again. I have a colleague who tells prospective clients, “I don’t want to care more about your financial situation than you do.”
When you hire a financial advisor, you are simply delegating certain aspects of your financial life to that person. You are saying, “I want to buy a portion of your time, expertise, and experience to assist me in achieving my financial goals.”
You know you have crossed the line between delegation and abdication when you stop thinking about what’s going on with your money, and choose not to meet with your advisor to find out. A healthy advisor-client relationship means staying in touch and staying informed.
Bottom-line: It’s your money and your future. Ultimately, you will reap the benefits or suffer the consequences of the financial choices you make.
If you are part of that 90-95% of the population that could benefit from professional help, find an advisor you can trust…and partner with him or her.
And so that you’ll be ready to discuss your financial future with that advisor, grab my free list of “30-Something Questions for People Who are 60-Something.” Email me at firstname.lastname@example.org and I’ll send it to you right away.
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