This is an interesting guest post from David Brown who writes for We Redefine.
Letting a financial adviser take over the reigns can be a very tempting proposition. We all want to be taken care of, don’t we?
That’s why most people prefer to have a finance guy or a finance girl to handle their money. So why should you fire your financial adviser? Is it because you have lost money? Not really.
Thanks to the recent financial meltdown, everyone has lost money in the last few years. Actually, you’ve got better reasons.
Here’s why you should get rid of your financial adviser:
1) You need to understand that a reasonably educated man can manage his finances just as well as his adviser can do for him.
The internet will provide you an overwhelming amount of relevant information. Therefore, you will be armed with all the required knowledge to plan your finances in a wise manner. Moreover, it’s always better to understand thoroughly what’s going on with your money rather than depending on someone blindly. It’s high time for you to stop paying a fat sum to your financial adviser. You have to pay to pay 1% or more of your assets each year to the financial adviser. So if you have a $10,000 portfolio then you got to pay $1,00 a year to your financial buddy. Is it really worth it? You would better invest that money elsewhere.
2) It is stupid to claim that all financial advisers are bad.
However, it is also a fact most clients are intimidated with their financial advisers due to one or more reasons. Many financial advisers are authoritative or simply arrogant in nature. They bully their clients, yell at them and treat their money as if it were his. Some do not take the client’s risk tolerance, time frame and investing philosophy into account. It is also not hard to find advisers who do not consider themselves to be answerable to their clients. They do not have time to discuss important details with you, cannot return your phone calls and you always have to hunt them down. Finally, there are advisers who refuse to take responsibility for the wrong advices they give which can really hurt.
3) Do you really think that your financial adviser cares for your money as much as you do?
You are definitely valuable to him as a client. However, that does not conceal the fact that you are just one of his many customers. Psychologically speaking, it is impossible for him to feel for your money in the same way as you do. If you take things in your own hands then you are likely to develop financial plans meticulously which your adviser won’t do. Moreover, there is nothing called personalized recommendation. Even the best financial advisers generally fit you into one of their few asset allocation models based on few sample questions. More often than not, this suggesting is done by a computer.
4) You surely have enough sense to understand that dumb financial advisers are not worth hiring.
But how smart is it to hire the good ones? The best financial advisers won’t even consider clients with less than 6-7 figures to invest. If your account has less than 6 figures in it then most probably you won’t be assigned a specific person who manages your account. You should also know that financial advisers can somewhat help you if you give them money to invest. They are of no use if most of your investments are held in a 401k. It’s time for some liberating experience and financial wisdom. So fire your finance man right now. It will be a decision which you most probably won’t regret in future.
Notes from Forest: Wow that was an interesting guest post! I am not totally sure I fully agree that all financial advisers are faceless blood suckers but David has some great points and we do need to think hard about using financial advice and if it’s helping us keep our money in order or not.
What do you think?