The Three Main Reasons Clients Leave Their Financial Advisors

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Is Something Wrong With Me, Or Is It Just My Financial Advisor?

Having a retirement plan is crucial, and what’s even more important is having the necessary people in your life to help you accomplish that plan.

The main purpose of a financial advisor is to understand your financial goals and to help you achieve them. 

When an advisor knows when you want to retire, they look at market conditions and your circumstances. This allows them to tell you what you need to do to retire in accordance with your lifestyle goals. 

If your current financial advisor can’t tell you what your financial goals are and how you can accomplish them, they aren’t helping you. Every advisor should refine your financial goals, and list out the action steps you need to achieve a healthy retirement. 

I have talked to too many people that feel they are having their time and money wasted by a financial advisor. Each time I hear this it saddens me. If your current financial advisor doesn’t understand your financial goals, they don’t care enough. 

Not to mention, you won’t make progress towards those goals. 

The fact of the matter is that your current problems need to be addressed sooner rather than later if you feel like your advisor is wasting your time and money. 

A survey of 1,400 financial advisors by Financial Advisors Magazine found the top reasons clients leave their financial advisor (in order) are: 

  • failure to communicate on a timely basis
  • failure to understand the client’s goals and objectives
  • failure to promptly return phone calls
  • poor investment performance 

Not good!

I hear from too many people who are unsatisfied with their financial advisors. Here are some things I do to avoid these common points of concern.

Problem #1 Service & Communication

I built my team specifically around the idea of being able to communicate with all of my clients whenever they desire. Also, I invite every one of my clients to meet with me annually to have a deep dive review, discussing performance, risk, retirement or income goals, tax strategies, beneficiaries and other important issues. 

This helps us make sure you’re on track and expectations are being met. 

Problem #2 Performance

The 2nd problem I see all too often is that financial advisors don’t perform up to the standard that they said they would. 

The main reason for this is that advisors want to play it safe and they have too much diversity in their investment strategy. I know this sounds contrary to what is generally taught but over-diversification dilutes your returns and it becomes almost impossible to accomplish good returns. 

Most people in the financial world consider this over-diversification the “efficient market theory.” Many advisors apply this strategy because it requires the least amount of work, and they can blame their bad performance on the market. 

If you put all your eggs in one basket, watch it closely. I prefer to be more focused on my investment approach. This way when I sit down with every single one of my clients I can strive to accomplish their goals on their timeline. And of course, this requires more research and discipline than the average investment plan. Yes it is intensive, but it’s what my clients deserve. 

This of course brings the question, what happens when one of these specific portfolio plans starts to perform poorly?

Ah, glad you asked!

I generally use an exit or stop loss strategy to protect the principal. In the 20+ years that I have been in the financial industry, this has been a crucial part of my investment strategy, especially during the dot-com bust, 2008 financial crisis, and COVID-19 lockdowns. 

Problem #3 Cost

There is no such thing as a free lunch.

Financial advisors structure their fees in three main ways:

  • Flat percentage fee
  • Flat dollar fee
  • Percentage of assets managed

The key difference you need to understand is if your current financial advisor is a fiduciary or works through a broker-dealer. The law holds each of these categories of financial workers to different standards. 

So get this: a fiduciary is an organization or person who must act in their client’s best interest. All investment advisors that are registered with the SEC must act as fiduciaries. 

But on the other hand, a broker-dealer only has to follow the suitability standard. This standard means that they must have a reasonable belief that the investment plan they are recommending is suitable for the customer. 

This becomes a problem when a broker-dealer sells you various investments that earn them commissions, regardless if it is the best option for you (this is the same for stockbrokers and insurance agents).

Fortunately, I am a fiduciary advisor, which means that I legally have to make financial decisions that are in your best interest. In other words, I must always disclose conflicts of interest and can never take a financial reward for selling a specific stock or option.

I only earn money from a fee that we agree upon. 

What Does It All Come Down To?

Finding the right person for any part of your life is not easy. But when it comes to something as important as your life savings and retirement plan, it is super important to have the right person. 

I hope this post allows you to understand if your current advisor is the right fit for you, or if it is time to move on. 

Either way, I am more than happy to answer any of your questions! Go ahead and email me or contact us

I look forward to hearing from you. 

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Disclosures

WealthGuard Advisors, Inc. is a Registered Investment Adviser.  California Life Insurance license numbers: Casey Murdock #0F01130.

This website is a publication of WealthGuard Advisors, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Blog articles and certain content were prepared by a third-party provider. Content should not be viewed as personalized investment advice or as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities discussed. A professional advisor should be consulted before implementing any of the strategies presented. Hyperlinks on this website are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto.WealthGuard Advisors, Inc. is registered as an investment advisor with the Securities and Exchange Commission and only do business in states we have notice filed. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s investment portfolio. Our Client Privacy PolicyForm CRS.

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