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5 Signs You Should Change Your Financial Adviser

Jul 26, 2019 | Kevin Troy |

5 Signs You Should Change Your Financial Adviser

Are you confident about the direction of the current markets? Do you feel confident your financial adviser will take appropriate action to ensure your wealth is safe from the next crisis?

With the volatility we’re seeing today, many investors are questioning their investment decisions. Traditionally, we’re told to just take a deep breath—after all, “market corrections and volatility are normal, and the markets will grow your wealth over time.” We’ve been trained to “buy and hold” regardless of what may come because when we buy and hold Wall Street makes money. 

However, today is not business as usual. Markets are being threatened from many angles, and our government and central bank are low on ammunition to fight the next crisis. Now is as good a time as ever to review and reevaluate your relationship with your financial adviser to ensure they have hedged your investments against the next recession.

In this article, I’ll show you how to choose a financial adviser with my helpful framework. Your retirement savings are in their hands, so looking at ways to feel confident about their decisions (and yours!) is time well spent.

1. How is your adviser performing?

Does good performance mean beating the market? Or does it mean securing the returns needed to meet your financial goals?

No one knows what the future will bring. Your adviser doesn’t know if the S&P 500 will set a record next year, or what will happen to emerging markets. Don’t hire an adviser because they “promise” high returns on their recommended stock portfolio—you’ll likely have to fire them if you use that as a measure of their skills.

Instead, choose a financial adviser based on their ability to guide you through the challenges of investing. Consider their ability to give you sound advice that helps you make the tough decisions that are best for you, your family, and your financial goals.

A good adviser will help you establish and maintain a diversified portfolio of investments allocated between stocks, bonds, precious metals, etc., while always keeping in mind your goals. This includes preventing you from making hasty and wrong decisions, such as

  • being overcome with greed when markets are doing great—you don’t want to buy near bull market highs because the risk may be more than you can afford; or
  • succumbing to panic when markets are volatile or declining—you risk losing track of the big picture, your long-term plan.

Bottom line: your adviser should ensure you see reasonable returns compared to your risk profile. 

2. Is your adviser responsive?

Financial advice is a service industry, and a measurement of your adviser is how good a service they provide. Since they are there to advise you, an important part of their service is whether they respond to your calls and emails in a timely and professional manner. Keep this in mind when choosing a financial adviser.

With today’s technology, we’ve grown used to expecting immediate response when we reach out. Don’t expect your adviser to respond right away with a solution, but expect them to at least acknowledge your concern by trying to schedule an appointment with you or assuring you they are looking into the issue you brought up.

3. Has your adviser helped you make a financial plan?

A financial plan is essential to make sure your assets are properly aligned with your financial goals. Your adviser should emphasize financial planning and ensure that your long-term plan is on track—not only when markets are thriving, but also when they are dipping.

There is always going to be volatility in the markets, and we don’t know when it sets in or how long it will last. But your adviser will guide you through such volatility and keep you focused on your long-term plan.

Do you not have a financial plan? You should schedule an appointment with your adviser right away to set one up.

4. Does your adviser reallocate and rebalance your portfolio?

When markets are volatile or declining, does your adviser provide you with tools to help you weather such conditions? No one has a trick up their sleeve that will magically fix market volatility, but your adviser should offer to rebalance and reallocate your portfolio to reduce risk.

A good adviser will guide you through this process, explaining why you should consider, for instance, shifting investments from risky sectors to conservative ones or reallocating some of your stock market assets  into precious metals. The most sophisticated hedge funds in the world, like Bridgewater, have recently recommended that their clients add precious metals to their portfolio—right when we entered what seems like the end of the stock market bull run. When choosing a financial adviser, you’re not looking for constant or unnecessary changes…but you should feel that your adviser is paying attention to your portfolio and makes adjustments that reflect changing markets and your risk profile.

5. Is your adviser a salesperson or a fiduciary?

A salesperson will encourage you to give in to your greed when markets are soaring and succumb to your fear when markets are dropping. Your financial adviser gets a commission on any product they sell you and hold under management, so some of them want to capitalize on your emotions and may recommend products that are better for them (i.e., pay a higher commission) over products that are better for you (i.e., stay true to your financial plan). A fiduciary adviser, however, is legally obligated to recommend what is best for you.

For instance, during market volatility a salesperson-type adviser firm may recommend a CD or an annuity that pays them a high commission instead of recommending that you simply reallocate some of your funds held in stocks into precious metals. They do this because they don’t offer physical gold and silver and therefore will not get a commission on the funds when they are pulled out of the stock and bond markets. A fiduciary would be required to recommend the second option.

Check how your adviser is compensated. A fee-only adviser who is acting as a fiduciary will work in your best interest since their compensation isn’t based on what products they sell you. If you’re working with a salesperson, such as a broker or an insurance agent, you should ask yourself whether their recommendation benefits them more than you—essentially, in that situation, you are responsible for knowing and deciding what’s best instead of relying on your adviser.

What should you look for in a good financial adviser?

Good financial advisers…

  • Reach out to you to schedule portfolio reviews
  • Offer educational seminars or other learning opportunities
  • Are always receptive and responsive to your concerns
  • Create your financial plan and revisit it regularly to make sure its focus is on your long-term goals
  • Won’t try to sell you high-commission products (annuities, etc.)
  • Look for cost-effective ways to keep your portfolio properly allocated over the years as the economic environment changes

If the above doesn’t currently apply, you should consider choosing a new financial adviser. We are currently in a volatile market environment, and a recession is just around the corner. These are pivotal times for your financial well-being, and you need to feel you can trust your adviser and their ability to recommend what is in your best interest. You need an adviser that keeps you from making impulsive decisions—one that follows a disciplined and well-thought-out investment approach and adapts to changing financial and economic market environments.

Gold removes the need to trust anyone

When you own physical gold, you don’t need to manage it, so there are no fees or a need to trust an adviser. You don’t need to trust the CEO of the company that you own shares in since you hold your assets yourself. If you trust yourself, you trust gold. That’s one reason why so many people have decided to start investing with Gold Alliance.

About Kevin Troy

Kevin Troy

In his more than 16 years in the financial industry, Kevin has focused  on precious metals as investment assets. He has penned numerous articles on buying and selling precious metals and about the best entry and exit strategies for the financial markets. Thousands of clients have benefited from Kevin’s expertise and learned to protect, preserve, and safeguard their investments with precious metals. Kevin has been with Gold Alliance for more than 2 years as a leading Sr. Portfolio Manager, and he oversees a large portion of our clients’ portfolios.