Key Points
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If your financial advisor isn’t benefitting you, it could be worth letting them go.
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Before you do, have an open conversation.
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Your advisor may be willing to negotiate their fees, or there may be another arrangement you can come to.
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When you hire a lawn service to trim your grass every week, you’re paying a fee for convenience. You could probably do the work yourself. But since it’s time-consuming, it may be easier to outsource it to a professional.
But paying a barber to cut your hair is a little different. It may not be that you’re too lazy to cut your own hair, but rather, that you wouldn’t do a very good job.
The same might hold true when it comes to managing your money. You could do it yourself. But will you get great results? Maybe.
On the other hand, if you hire a financial advisor, you’ll have the benefit of a professional who can help you meet savings goals, invest savvily, and address other key matters like insurance and estate planning. So it could be worth paying a financial advisor’s fee.
In this Reddit post, we have someone who’s questioning that fee. The poster is thinking of firing their financial advisor because they feel like they can invest in a bunch of ETFs and potentially achieve returns similar to what their advisor is getting them, though actual results may vary depending on the advisor’s investment strategy.
The poster doesn’t have any personal issues with their advisor per se. They just don’t think they’re getting great value for their fees.
The poster brings up an important point. But before cutting ties, it could pay to have a conversation.
You don’t want to throw your money away
It can be very worth it to pay a financial advisor to manage your money, especially if you’re someone who’s not familiar with investing or doesn’t have the time or desire to learn about it. But you also don’t want to feel like you’re throwing money away, whether it’s in the context of using a financial advisor or something else.
If that’s how you feel, think about what the problem is. If you feel your advisor is lazy and uncommunicative, and that they don’t listen to you or your needs, then it may be time to move on. But if you feel that your advisor is generally doing the job you asked them to, then it may be time to dig deeper into the problem.
There may be a way to salvage the relationship
In the situation above, I think it’s important that the poster have an open discussion with their financial advisor about how they’re feeling. It may be that their financial advisor is doing everything they were asked. And if that’s not enough for the poster, perhaps they should walk away. But there may also be another solution.
It sounds like the poster’s advisor’s investing strategy isn’t all that stealth. Anyone can put their savings into broad market ETFs.
The poster also says their financial advisor put money into a bunch of dividend stocks. But at this point, the poster could potentially fire their advisor, keep those stocks, and monitor their performance.
If the poster isn’t getting great investing advice, they may not want to pay their financial advisor an ongoing fee that’s calculated as a percentage of assets under management. Instead, they may want to meet with their advisor once or twice a year, pay an hourly fee, and discuss financial concerns and goals. They can also meet a couple of times a year to do a portfolio check-in.
This type of relationship is a more hands-off one. But it’s a relationship the poster’s advisor may be open to. That could give the poster the best of both worlds — access to an advisor without the higher fees.
It’s also worth talking to the advisor and seeing if their fees are negotiable. And they may not be. But the poster won’t know without having that conversation.
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The post I’m thinking of firing my financial advisor because I’m not getting great value appeared first on 24/7 Wall St..
