Is Your Financial Advisor Doing A Good Job?

Originally posted in the RLS Wealth Management Notes on November 15th, 2018


It depends on how you are looking to measure your financial advisor’s success. It is very common for clients to evaluate their advisor based on the performance of their investment portfolio, which makes sense since it is the most tangible and measurable aspect of the financial planning relationship. However, basing your satisfaction with your financial advisor solely, or even largely, on how your portfolio has done recently is flawed.

It’s flawed for a number of reasons.

First, what is the metric you are using as a comparison? Is it the Dow Jones? The S&P 500? Your neighbor’s portfolio? Or, is it a diversified portfolio reflective of the risk tolerance and asset allocation of your portfolio? From experience, it is rarely the latter, and that leads to an unfair comparison–it’s apples to protein shakes.

Second, your relationship with your financial advisor extends (or it should) well beyond your investment strategy. The relationship you have with your financial advisor should be centered around your financial plan—you have one of those, right?  Your investments are a part of your financial plan, but not the only part, and arguably not even the most important part.

Third, to continue on the second reason, income planning, estate planning, tax strategy, college funding, planning for other goals, insurance planning, and managing your plan to your life are all important parts of your financial plan and relationship with your financial advisor. The tough part, and why they are not really thought about when determining the quality of your financial advisor’s work, is they aren’t really measurable. Despite this, DO NOT underestimate their importance.

Continue reading in the Notes at RLS Wealth Management by clicking here


Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimer page.

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