Very recently I had a conversation with somebody that went something like this:
ME: Tell me about the other advisors in your life.
THEM: I have a tax advisor, an attorney set up a trust for us and another financial advisor at XYZ Firm [the name has been changed to protect the innocent].
ME: Ah good, sounds like you value advice. When was the last time you talked to the financial advisor at XYZ Firm?
THEM: A couple of years ago.
ME: A couple of years. Was it before the financial crisis or after?
THEM: It was before.
ME: Can you see the wisdom in sitting down with me and getting a second opinion without any cost or obligation?
THEM: Yes, that sounds good, but we’re not going to move away from XYZ Firm, we like it where it is.
I’ll stop there, but I believe I slapped myself on the forehead after she said this. Often I’ll ask people about what fees their current advisor is charging them. The most common response is, “Oh, they don’t charge us any fees.” Let’s step back and consider this as a consumer, would it make sense for someone to do something for free? Even if you never hear from them, the cost of sending you statements or whatever other mail you get, the cost for your advisor to have a job. As a general rule of thumb, if you have an investment of any sort, you are being charged fees. If you don’t know what they are, you should find out. Secondly, once you know how much they are, ask yourself if the amount you are paying is worth the services you are getting from the advisor?
As it turned out with this person I was talking to, I looked through her old statements and discovered that she had been charged about $10,000 in fees since the last time she heard from her advisor. Her advisor who hadn’t called her to continually evaluate her goals and objectives along the way.
The sad thing is that, I wonder how many other people out there are in the same position and don’t know of alternatives. I admire loyalty, but at a certain point it would be absolutely foolish to not weigh the fees you are paying versus the value you are getting.
Can you see the wisdom in sitting down with me and getting a second opinion without any cost or obligation?.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Investing in securities, including stocks and bonds, is subject to market fluctuation and possible loss of principal. No strategy can assure success or protect against loss.
Chad Gordon is registered with, and securities are offered through LPL Financial, Member FINRA/SIPC.