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6 Red Flags That Mean It's Time To Switch Your Financial Professional

6 Red Flags That Mean It's Time To Switch Your Financial Professional

February 15, 2024

A good financial professional is necessary when it comes time to manage your portfolio and work toward your financial goals. Financial professionals may differ in their approach to certain financial products and goals. However, it is important that your financial professional provide the service you need to set you on the financial path you desire. Here are some red flags to watch out for that may be a sign that it's time to consider replacing your financial professional with one better suited to your needs.

Red Flag #1: Lack of Communication

When it comes to investing and managing your financial portfolio, communication is critical. Without proper communication, you may find that your profile is lacking or your financial goals are not being considered. If you only receive calls from your financial professional when making a trade, it may be a good time to consider a switch. Your financial professional should regularly meet with you to discuss your portfolio’s performance and possible changes you may wish to make.1

Red Flag #2: Financial Advice Doesn't Change

Financial portfolios are fluid. They are not designed to be set-it-and-forget-it. Your life, financial situation, and the world around you change. This means that your portfolio may need to change as well. What worked for your portfolio the previous year may not work in the current financial climate. You may get married or have children, which may change your financial goals. Your financial professional should know how those changes affect your financial portfolio and offer guidance accordingly.

Red Flag #3: Your Concerns and Ideas Are Not Heard

Your financial professional is there to guide you on various financial products that may help you work toward your financial goals. To do this properly, they must listen to your wants and needs. It may be time to switch if your financial professional disregards your input or fails to consider what you want. You should always feel that you are being heard by your financial professional, even if their opinion differs.2

Red Flag #4: Not Adapting to a Changing Environment

The COVID-19 pandemic changed how business is done, and you now want to ensure that your financial professional is keeping up with those changes. Your financial professional should be easy to connect with through video conferencing and phone meetings that are now becoming prevalent across all industries. If your financial professional does not provide various communication options or fails to return calls and get back to you promptly, it may be a reasonable time to find one who does.

Red Flag #5: Not Keeping Up to Date With Changing Rules and Regulations

When it comes to investments, many rules and regulations must be followed to be in compliance. Your financial professional must always stay current on the changing rules of investing and the various tax codes. Knowing the tax implications of your different investments helps you manage your taxes and the taxes your loved ones may pay if you pass. If your financial professional does not seem well-versed in updated rules and regulations, this may lead to mistakes that could ultimately cost you dearly.

Red Flag #6: Your Portfolio is Consistently Performing Poorly

When you meet with your financial professional either quarterly or annually, you should receive a breakdown of your portfolio performance during the recent period. At this time, you want to compare your portfolio's performance with benchmarks based on what would be considered good, fair, or poor performance for each investment type.3

If your portfolio is performing poorly or stagnating, it may be a reasonable time to review your strategy. While it is important to remember that not all investments always perform well, your strategy may be wrong or not diverse enough if your portfolio is consistently underperforming. Your financial professional should regularly review your portfolio and contact you to address consistent performance issues and ways to rectify them. If not, they are probably not the right choice for your portfolio management.

If you notice any of the six red flags above, switching to another financial professional may be appropriate. Your financial professional needs to stay on top of things and maintain proper communication with you so that you stay focused and continue to work toward your financial goals.


1 5 Signs It’s Time to Change Financial Advisors

 2 Here are the Top 3 Reasons to Fire a Financial Advisor, Say Experts

 3 5 Signs It's Time to Break up With Your Financial Advisor


Important Disclosures

 The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

 All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

 This article was prepared by WriterAccess.

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