The Informed Investor

EXPECTATIONS FOR YOUR FINANCIAL ADVISOR IN VOLATILE TIMES

Randy Garcia, AIFA, CIMA

July 28, 2020

A good investment advisor can offer you a full range of services, from investment advice, to planning for your financial goals and staying accountable to them when the unpredictable happens. In reality, however, many investment advisors are very busy, so while they may have the best intentions, they may not provide all the services you could benefit from unless you ask.

Then, there are also investment advisors who, unfortunately, have a business model that doesn’t put your interests first.

Either way, your money is at stake, so it’s smart to become educated on what you should expect and how to make sure you get the help you need.

What Should You Expect During Volatile Times?

Over the past 11 years, the market has mostly gone up, so many people have been happy with their investment advisors, even if they were not doing much.  Everyone looks good when the market continues to go up. It is in the down and volatile markets that your advisor will earn his or her fees.

When times are volatile, a quality advisor should be in touch with you more often, not less.

Here is a list of other things to be sure your investment advisor is doing for you, so you can stay on the right path to achieve your goals.

  1. Act as your legal fiduciary

When your life savings are at stake, you need to be sure you’re receiving honest advice and not a sales pitch. Too many people have heard upfront sales promises, only to be highly dissatisfied years later. That’s often caused by working with investment advisors who are motivated to sell you products that they’ll earn a commission from, even if it’s not the best product for you. Instead, you deserve service from a fiduciary investment advisor, meaning an investment advisor who is legally obligated to put your interests first.

If you’re not sure whether the advisor is acting as your legal fiduciary, ask them. Then request it in writing. Quality investment advisors will understand your concerns and gladly comply.  If not, you just learned something valuable and you should consider whether it is worth the risk to continue working with someone who is not obligated to give you advice that is in your best interest.

  1. Manage your risk.

Second, your investment advisor should be actively managing your risk at all times. It’s not acceptable for your advisor to have you overinvested in any one area, making you vulnerable during market downswings. Diversification is critical to managing risk.

Not all advisors know how to invest defensively, either, which may put you in a situation where you are taking on more risk than you’re aware of.

So don’t be afraid to ask your advisor if you’re invested for volatile times. It is their job to help you preserve what you’ve worked so hard to build. Make sure they are skilled at managing risk and are doing that for you at all times.

  1. Provide ongoing support.

Investments are important, but building and maintaining wealth requires much more. Your investments may be outperforming, but if you’re consistently overspending, or making bad financial decisions, you will be less likely to achieve your goals. Your investment advisor should provide you with an analysis showing what spending level is prudent to achieve your long-term financial goals. Also, your investment advisor should be the one to help you feel confident about the well-being of your finances when volatility inevitably strikes.

Educating you on the requirements to achieve your financial goals is one of the most valuable things your advisor can do for you.  Your advisor should be there to act as a safeguard between your money and potential financial mistakes.

You should expect and receive frequent reviews to help ensure you’re making progress toward your goals and avoiding setbacks.

  1. Help with financial decisions (and avoiding costly mistakes).

It is easy to make a quick financial decision you’ll regret. We’ve all been there at one time. Fortunately, having a quality investment advisor in your life can help you avoid that feeling of regret. Instead of making a snap decision, contact your financial advisor before you buy that timeshare, buy a bigger house, increase your holdings in Bitcoin or invest in your sister-in-law’s new startup business. Whatever it is, getting an objective opinion before you sign on the dotted line can help you weigh your options and provide perspective to make a decision you’ll be happy with.

  1. Increase your confidence.

Today’s financial markets are complex. Unless you are in the industry, you probably don’t have time to learn as much as you need to know to understand technical concepts and terminology.

A good investment advisor can help demystify the market, so instead of being intimidated, you are educated about your investments and your financial plan. That means an advisor who explains things in plain language without jargon to help you make informed decisions.

Don’t Lower Your Expectations

With this year’s uncertain markets, getting everything you should from your investment advisor is critical.

So make sure you’re getting the attention you deserve. The best investment advisors have systems in place to keep in touch with you on a regular basis, and ensure your calls and emails are returned in a timely manner.  At the Investment Counsel Company we meet with all of our clients quarterly to review their portfolios and discuss any changes in their lives or their financial needs.

However, not all investment advisors offer the same service. Use this article as a guide to make sure you will or are receiving the attention you need to achieve your goals. Especially in times of uncertainty, your advisor should be a fiduciary, someone in your corner, helping you chart the path ahead. Our team of advisors are here to serve your best interests.

 

 

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