Personal Finance Essentials
Evaluating Your Advisor’s Performance
Here’s How to Know Whether Your Advisor is Still
Earning Your Trust
Choosing an advisor carefully doesn’t mean the job is done. Complacency can set in on both sides of a relationship, and many clients fail to periodically ask whether their advisor is still delivering what they need.
Use the following categories when evaluating your advisor – not just at the beginning, but throughout the relationship.
Your Relationship
Do you feel comfortable talking with your advisor? Do you look forward to the conversations, and leave them feeling more informed and more confident? If you dread upcoming contact with your advisor, something is wrong.
Services
Is your advisor delivering the services you actually need? Think about what you’re receiving and ask which of those services you would genuinely miss if they stopped. Services you wouldn’t miss aren’t adding value. At the same time, consider whether there are services you need but aren’t currently receiving – and ask yourself whether you’ve actually requested them.
Investment Performance and Risk
Are your returns competitive relative to your goals, your risk tolerance and your personal situation? Your advisor can help you identify a benchmark that is relevant to your circumstances. Equally important: has your account fluctuated more than you are comfortable with? If so, have you discussed this with your advisor and has that conversation led to meaningful adjustment?
Communication and Strategy
During periods of volatility, is your advisor still able to articulate a clear and coherent strategy? Is your portfolio properly positioned? An advisor who is making or suggesting frequent major changes may have lost confidence in their prior advice – which calls their current advice into question as well. Worst of all would be an advisor who has gone entirely silent: no calls, no emails, no response to yours. That is a fundamental failure, not a minor inconvenience.
Team vs. Solo
Even at a large national firm, many advisors work independently with no coordination with colleagues. Don’t assume that a big brand means team-based service. A practice built around collaboration provides greater depth of expertise and reduces your dependence on the judgment and availability of a single person.
Costs and Regulatory Record
Are the total costs you’re paying – advisor fee plus investment expenses – reasonable compared to what others charge for comparable services? It’s not worth chasing the lowest price, but paying significantly more than the market rate for no discernible reason is worth questioning. Finally, check your advisor’s regulatory record periodically. A clean record at the time of hiring doesn’t guarantee a clean record today. Checking every few years is a reasonable and sensible habit.