Is Your Financial Advisor Missing Something?

Six missteps that may be costing you 

There are plenty of good folks serving as financial advisors.

Many of my colleagues form pleasant relationships with their clients and seem to really care about the client-advisor professional relationship; unfortunately, that is not enough. Frequently, new clients will come in and discuss how much they enjoyed working with their previous advisor who, too often, seems to have had their priorities backwards.

Too often, financial advisors are more motivated by pushing products such as investments and insurance policies before forging a strategy that meets the needs and expectations of a client for his or her retirement years. 

To put it simply, the way many advisors go about building a retirement plan for their clients is like planning the wallpaper, carpet, and other aesthetic considerations for a house before the blueprints have been completed. It may seem obvious that you need the blueprints first, but many people — laypeople and financial professionals alike — can get lost in the details.

The following are six missteps that financial advisors make that cost their clients:

• Your sense of being a priority is directly proportional to your asset size or income. Many financial firms and advisors have a minimal wealth criteria to judge whether you are worthy as a client. If you just meet the minimal criteria, be mindful that you may be getting just the minimal amount of service you deserve.

• The advice you receive leans toward selling you financial products. You want advice that truly has your best interest at heart. Advisors from some large financial institutions may have an ulterior motive with their recommendations — they are trying to push products. Independent firms and advisors usually do not have this burden.

• Your financial game plan feels fragmented; various advisors do not feel like a team. Tax and legal issues, mortgages, and planning services are areas that need to be addressed, which typically require multiple professionals. If they are not all on the same page, your strategy is probably suffering.

• You don’t really understand the wealth strategy your advisor is pursuing for you. Whether you’re still in your earning years and planning for the distribution years, in transition, or finally retired, a basic understanding of what is happening with your money is highly recommended. 

• Your account’s distribution/withdrawals have little or no tactic. Withdrawals from your accounts inevitably weaken them, but there are ways to minimize the cost. Make sure your advisor shows you how to make withdrawals while causing the least amount of reduction to your account.

• You don’t have a tax-reduction plan. There are three buckets to taxation — tax-deferred, taxable, and tax-free. If the bulk of your retirement money is not in the tax-free bucket, then you’re probably paying more in taxes than you need to be.    

Mark Roberts is founder of Affinity Asset Management (www.affinityasset.com), where he offers advice on retirement tax strategies and distribution. He has two decades of experience in the financial industry,