The Market's Getting Scary: Has Your Financial Adviser Called You Yet?

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Financial Advisor
Alamy
When stock and bond markets start to buck and plunge -- like they're doing now -- many investors get nervous about their investment strategies, and look for a little professional hand-holding. After all, one of the main reasons to pay a pro for financial advice is to get the customer service you need to ride out challenging markets without losing sight of your long-term objectives.

In dealing with a financial adviser, though, the question inevitably arises: How much personal contact should you expect? Unfortunately, the answer often depends more on the way your adviser is compensated than on your real needs.

How You Pay for Your Adviser's Phone Calls

On the one hand, those who work with stockbrokers and others who get paid on commission should expect to hear from their advisers fairly regularly. But often, those calls are merely to solicit buy and sell recommendations for their investment portfolios rather than to talk about bigger-picture financial issues. Unsurprisingly, if brokers only get paid when clients buy or sell, then their employers typically pressure them to boost their commissions.

On the other hand, fee-based financial advisers often have the opposite incentive. These advisers often get paid a percentage of the total assets they manage for you. The optimal arrangement for them, therefore, is to give you just enough personal attention to keep you as a client, and spend as little effort as possible to get that fixed fee.

Overall, regardless of the ways they're paying for it, clients frequently don't feel that they're getting the advice they need.

Even among ultra-wealthy clients, a recent poll from investment-services provider SEI found that although 39 percent of those surveyed are most confident working with a wealth adviser to help handle tough financial questions, 57 percent believe their wealth advisers aren't giving them all the information they need in order to assess their investment risks. As Michael Farrell, managing director of SEI Private Wealth Management, noted, the solution "comes down to having frequent and meaningful communication with clients in order to arm them with all the information and advice they require to make confident decisions."

If even the ultra-rich aren't getting the level of service they want, imagine how much harder it must be for those with more modest assets -- and less income potential for the advisers who serve them -- to get the attention of their financial professionals.

How Often Is Often Enough?

Obviously, different clients need different things from their financial advisers. Some will want frequent feedback, while others will be content to establish a plan and stick with it. You might want high levels of contact early on as you establish an investment plan, and then be willing to accept less contact as changes become less necessary and frequent.

But there are some objective minimum standards that you can fairly expect good financial advisers should meet.

For instance, the standards that govern the Chartered Financial Analyst designation for investment professionals state that clients should have their baseline investment policy statements reviewed and updated at least annually, as well as when major changes take place in their lives. For instance, after an event like a marriage or a birth of a child, revisiting your financial situation is beneficial.

Perhaps most importantly, advisers should tell you at the beginning of your working relationship how much interaction you'll have and in what form. Setting expectations helps you hold your adviser accountable; if an adviser doesn't deliver the promised level of service, then you'll know it's time to look elsewhere.

Get the Service You Need

Financial advisers will earn thousands of dollars over the course of your lifetime to provide you with the services they offer. It's your right to claim every penny's worth, and the key to a successful adviser relationship is finding an investment pro who'll your goals the top priority.


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11 Comments

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hsstempe

grab your cheeks and hold on, it ain't over till the fat lady sings and the govt owns it all...

June 26 2013 at 2:25 PM Report abuse rate up rate down Reply
Doug

"The Market's Getting Scary: Has Your Financial Adviser Called You Yet?"
Great article but a good broker is like a good spouse - "Too much can sometimes not be enough' and "Not enough can sometimes be too much' - It is a personal relationship built on trust - I have had 3 brokers in 25 years of trading - one got promoted and lost interest in me , the 2nd never was interested in me and the 3rd time was a charm. My Merrill Lynch broker and I are a team ( he is a Sr VP ) and we work together .to adjust my portfilio when needed.

June 26 2013 at 1:57 PM Report abuse -2 rate up rate down Reply
drbuckles

The wealthy bond holders rush to slam a putt of 1% as everyone else takes a bath from father Bernanke's helicopter maneuvers of raining down money on the wealthy and the corporate sociopaths. Taxation without fairness, it's not fair if you don't let us cheat. Everyone should be able to cheat like the bankers do, so lets democratize cheating, just like the Chinese.

June 25 2013 at 8:08 PM Report abuse +2 rate up rate down Reply
David

The only thing that is scary is your adviser!

June 25 2013 at 7:01 PM Report abuse +5 rate up rate down Reply
sam54ct

Only scary for the flunkies, the rest of us sell high, than buy low after the flunkies have divested themselves from the market. It goes in these cycles, and has since day one. If you're not intelligent enough to play the game, deposit your money in the bank and watch it erode.

June 25 2013 at 4:54 PM Report abuse +1 rate up rate down Reply
1 reply to sam54ct's comment
labourboss

I agree. I sense another buying opportunity coming up!

June 25 2013 at 5:55 PM Report abuse rate up rate down Reply
bikeguy54ed

The market has always been scary. Nothing new here. If you need to be reassured frequently, you should be in savings or cds.

June 25 2013 at 4:31 PM Report abuse +6 rate up rate down Reply
Tom

I think that this WAS predicted to happen under the thrifty eye of the current administration. And as I had said before, "hold on tight"

June 25 2013 at 4:16 PM Report abuse +1 rate up rate down Reply
2 replies to Tom's comment
labourboss

Invested in GE at $7 the day after President Obama was elected. I just sold it several months ago at $21. History has shown that Democratic presidents had ALWAYS been good for the stock market.

June 25 2013 at 5:57 PM Report abuse +4 rate up rate down Reply
1 reply to labourboss's comment
you old fart

This statement from a labor boss shows the market is rigged

June 26 2013 at 10:03 AM Report abuse -1 rate up rate down
you old fart

Just what in the Hell is thrifty about this administration with the Stimulus robbery en all

June 26 2013 at 10:05 AM Report abuse +1 rate up rate down Reply