We generally appreciate what Liz Weston, columnist for the NerdWallet website, has to say, and this recent article is no exception. Instead of focusing on the nuts and bolts of financial planning and investing, Weston brings up the human dimension. During tumultuous seasons in the market like the one we’ve experienced since the coronavirus pandemic began, you have every right to expect some attention and empathy from your financial advisor. But if all you’re getting is radio silence (or vague generalities) you might want to work with someone else.
If Your Financial Advisor is Really Helping You, This Downturn Should Show It
“Stock market crashes don’t just test investors’ mettle,” Weston writes. “Abrupt downturns also can reveal what kind of financial advisor you have.” Sadly, based on some highly-publicized financial scandals of the recent past (Bernie Madoff comes to mind), a big drop in the market might cause you to realize your so-called advisor is a crook. “Ponzi schemes are among the cons that fall apart when markets do, as investors try to pull their money out and discover it’s gone,” the article observes.
But fortunately, the odds that your advisor is a Madoff protégé are slim. “More commonly,” says Weston, “people learn that their advisors didn’t put the clients’ best interests first. The advisor may have recommended investments that were unsuitably risky or hard to sell, or failed to adequately diversify clients’ portfolios.” And even if your broker wasn’t giving you inappropriate advice, it’s possible he or she wasn’t delivering the personal touch to which you feel entitled.
“Even if you dodge the worst, your advisor may not deliver the value you expected,” NerdWallet observes. “It’s reasonable to assume you’ll get some degree of hand-holding, reassurance and personal service when you choose a human advisor over less expensive options, such as a robo-advisor or investing on your own.” After all, you probably chose that advisor because you wanted guidance. During times of Wall Street upheaval, that advice is especially critical.
If Your Financial Advisor is Really Helping You, Has He or She Contacted You?
The first question Weston says you should ask is the most basic: has your advisor bothered to reach out to you since the COVID-19 crisis started driving the markets into bear territory? “Demanding instant responses isn’t realistic at a time when advisors, like the rest of us, are grappling with pandemic-wrought changes,” Weston reminds readers. “They may be working from home, struggling with unfamiliar technologies, trying to keep their pantry filled and home-schooling their kids. Family members may be ill or at risk. Plus, they may be busy responding to clients who are a lot more freaked out than you are, or at least more vocal about it.”
Nevertheless, “by now your advisor should have checked in with you,” and not simply with a newsletter or mass email. If you’ve called or emailed, Weston says, you should be getting responses. One financial advisor in Michigan told NerdWallet, “We’re reaching out to every client on our roster via telephone to see how they are doing and talking through their concerns.” That sounds like an appropriate starting place to us.
If Your Financial Advisor is Really Helping You, Does He or She Listen?
“Let’s say you have heard from your advisor. Was it a pep talk, a lecture or a conversation?” Weston asks. This the time for sensitivity and empathy coupled with a sense of calm. “Good advisors remind clients of their goals, encourage them to stick with their strategy and reassure them that markets always bounce back eventually. But good advisors also ask plenty of questions and pay attention to the answers.”
“It’s not about portfolios and investments and mutual funds all the time” said another financial planner. The interaction with your advisor should go beyond spreadsheets and into personal connection (that is, unless you’re the type of client who doesn’t want that kind of relationship with a financial professional). Your advisor should ask about your family, your health concerns, your work and your emotional well-being. That way you sense that you’re more than just an account number.
If Your Financial Advisor is Really Helping You, Is He or She Truly Leaning In to Assist?
Financial advisors worth their salt should be able to assist with more than reshuffling your portfolio, Weston writes. “If you’ve lost your job, you may need to find health insurance, file for unemployment, evaluate a severance package and figure out how to make ends meet — all tasks that a good advisor should help you with.” Whether retirement is imminent or decades away, you will want reassurance that your plan is still on track.
The CARES Act contains a wide range of provisions you should be hearing about from your financial advisor. And even if you don’t have a pressing financial need, says NerdWallet, “it might be a good time to do a Roth conversion, sell losing stocks to offset gains from winners, rebalance your investments or even speed up your retirement contributions.”
The bottom line is simple, Weston concludes. “Bad markets and trying economic times are an opportunity to see how seriously advisors take their responsibilities to their clients.” One advisor put it succinctly. He told NerdWallet, “Our character is often determined by how we show up at times of adversity. Now is the time to lean into it, and step up for the families that count on us to do so.”
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(originally reported at www.nerdwallet.com)