A Cautionary Tale of When to “Run, Runaway“
From competing priorities to lax data and security protocols, I’ll demystify who to avoid when seeking out financial guidance from professional advisory services. For those reading who provide these services, my intent is not to ruffle feathers but for you to better understand from our perspective of why only 27% of Americans use financial advisors, with 60% prioritizing trust as the top factor.
I was recently searching for a fee-only CFP – Certified Financial Planner on the Fee Only Network for Chicago. A CFP is the highest-level designation for a financial advisor / planner who present themselves as a fiduciary by putting your best interests first, ahead of their own, fully disclosing and managing unavoidable conflicts fairly in your favor, at all times. Only 30% of financial advisors / planners hold this rigorous designation.
One particular CFP who is also a CFA (Chartered Financial Analyst) along with having an MBA, presents himself as a fee-only fiduciary. He requires at least $1 million of your hard-earned money but also openly shows that he does not keep up with the technology that is critical to his livelihood, a website that is Not secure with no actual picture of himself in real life anywhere on that site. Now granted, his office is in one of the wealthiest suburbs of Chicago but what was acceptable to new clients 30 years ago no longer is.
Another web page lists his fees starting at “95 basis points per annum for assets held in custody with a minimum $1.0 M in account size.” Translating this to modern-day English, fees start at $9,500 per year every year based on the $1M in funds he has invested for you. This is a typical advisory fee that falls well within the average range but the wording tells me his targeted clients are in their 80’s.
In all seriousness, I don’t care how many certifications or degrees you have or how much expertise or assets you have under your management. If you don’t keep up with modern-day technology and cybersecurity, you are no longer a compliant fiduciary and have no grounds to advertise that you are one.
Who else should you avoid in hiring a financial advisor / planner?
Those who don’t listen to what you want to see in your financial plan / investments. They don’t listen to understand – your personality, experience and circumstances. They listen for what they can capitalize on.
Those who don’t share your values and have competing priorities to do what’s best for them and to do what’s best for you.
Those who don’t allow you to maintain your independent approach to financial decision making.
Those who insist you play a minimal role in your investments and let them deal with the “burden” of your account, since it is their job.
The quality of their advice doesn’t justify the cost, especially if the fees aren’t transparent for what type of service you are seeking.
Those who put words in your mouth and figures in your plan trying to influence you that you really need them when you actually don’t.
Those who put you into a one-size-fits-all financial plan and expect you to accommodate the changes to make it work.
Those who don’t respect you.
You want the experience and relationship like I had with E*Trade. I needed access to execute and sell my husband’s stock options. He didn’t have time and these had rolling expiration dates. They treated me royally, as if I were the account holder, granting me my own login and security protocol once my husband gave his consent. I would watch the stock price then call or text my husband I was executing when it reached a certain price.
(It was the closest I came to day trading. I get how exciting and novel this feels especially when the sale executes well above your basis, but it isn’t sustainable. I eventually set ask prices and once accepted, it would automatically transact to ensure the sale before expiration.)
Those who ignore or ghost you. If they don’t realistically have time to take you on as a new client or have the intent to collect assets from you and then do nothing, they will get paid regardless of whether they do anything with your account or not.
Those who commingle their name alongside yours on the title of your investment account. It grants them unrestricted authority to use the funds at their discretion.
Those who promise to get you a better return than you’re getting. Not only can’t they guarantee it, but it’s also illegal to do so.
Those who don’t understand tax requirements, especially Roth IRAs / Backdoor Roth IRAs and what to do in the future when you change jobs and need to roll-over a 401(k) account somewhere.
Those who rely on excessive stock photos to characterize their firm’s brand as credible and authentic.
Those who sound great on the phone but won’t do a virtual video call. What are you hiding? A messy desk, no office, technology illiteracy?
I think technology proficiency for financial advisors / planners goes far beyond being able to use AI like ChatGPT, Claude or Perplexity for answers to questions or admin automation. To obtain us as clients, especially when technology is forefront, financial professionals need to be tech-savvy in everything they present.
Digital financial tools are the future and required for us to even find acceptable financial guidance that fit our needs. The Fee Only Network website I used did not successfully find anyone suitable for what I was seeking. Most of them required a minimum investment of $500,000. I didn’t want to move any of our investments or need guidance of how to invest or stay invested. I wanted a second opinion to ensure my model and calculations were on track for a reasonable fee I was willing to pay.
We eventually found someone well qualified who has the expertise including their financial planning model, understanding how it works, making changes on the fly as she was meeting with us. She then set it up for us to login to review the accuracy, make specific spending changes and run the reports, charts and scenarios we wanted to see. Eventually, I think greater access to charts and graphs will become another dimension to the client tools and experience.
We don’t want to be handed off to some financial modeling person who rigidly enters data into a financial planning model once and then runs only one simulation or scenario. If the financial model and digital tools offered by financial advisors / planners aren’t user friendly and accessible to their clients, especially younger ones, we will go elsewhere or not engage with them at all.
Which segues into the next post, financial guidance – who to engage.
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10 Things Financial Advisors Don’t Want You to Know | WiserAdvisor.com
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