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A good financial advisor can add tons of value to a client's financial well-being and enhance quality of life. But, “good” is a subjective term. In this case, a trustworthy advisor denotes someone who is qualified to help clients, and whose personality gives clients the confidence to follow that advice.
Here is a list of six things financial advisors do that might mean that they're not up to par:
DON’T RETURN CALLS
A good financial advisor is probably busy, but if clients are not important enough to rate a response within a reasonable time frame, the situation isn't healthy.
While most advisors can tell a story about a client who calls every day, my experience is that most clients make reasonable requests and deserve a prompt reply to their questions. If the advisor who a client is paying for financial advice won’t reply to calls, why would the client continue paying?
DON’T NEED A THIRD-PARTY CUSTODIAN
Can you say '
Madoff had his own
DON’T SPEAK UP
An important aspect of a healthy client-advisor relationship is honest and open communication that goes in both directions.
Clients might express a desire to make a particular financial move or to invest in a particular stock or mutual fund. A good advisor will tell the client whether or not she disagrees with this suggestion and, if so, the reasons for the opinion. Not doing this is doing the client a huge disservice.
At the end of the day, it’s the client’s money, and they can do with it as they wish. A good financial advisor will never tell a client what the latter wants to hear just to keep earning fees or commissions from them.
IGNORING A SPOUSE
While this can occur with both male and female advisors, and the ignored spouse can be either the husband or the wife, most accounts of this type of behavior tend to be with male advisors all but ignoring the female part of the client duo. There have been several accounts of widows leaving the advisor who served their family when the husband was alive — and leaving for just this reason.
Any advisor worth their salt should understand that he or she serves the interests of both spouses equally.
TALK DOWN TO CLIENTS
Not all clients are financially sophisticated or, for that matter, even take an interest in their financial affairs at all. Still, it's the duty of the advisor to explain why suggesting a certain course of action or a particular financial product is best for the client — and to do so in a fashion that makes sense.
Like most other industries, customers won’t likely respond well to someone that they are paying for advice if they are feel they are being talked down to them or made to feel less intelligent.
BEST INTEREST
This is perhaps most common in dealing with financial advisors who are compensated wholly or in part via commissions from the sale of financial products. Are advisors recommending mutual funds, annuities, or insurance products that pad their bottom line while possibly not being the best product for a client?
Clients will need to ask questions, to understand how you are compensated, and be clear on whether this results in conflicts of interest.
The six no-no scenarios outlined above are, naturally, not evinced by all financial advisors. Rather, they are likely the six worst characteristics an advisor can show in dealing with a client. If an advisor exhibits any of these traits on a consistent basis, clients are likely to take it as a sign that it's time to find a new financial advisor.
