“My wife and I are retired and living in Wisconsin, collecting Social Security. I also have two pensions and earn over $75,000 each year. Earlier this year, I noticed a drop of $45,000 in my retirement savings. I currently work with two financial advisors, but I’m not satisfied with the results. Should I consider hiring a new advisor and essentially start over?”
Alonso Rodriguez Segarra, a certified financial planner at Advice Financial, shares his thoughts: “If my advisor had made changes to my portfolio during that market drop in April, I wouldn’t have been pleased. But I’d be even more frustrated seeing the market bounce back and hit record highs afterward.”
Before making any hasty decisions about your advisor, it might be worthwhile to discuss your situation first. Thomas J. Block, a certified financial analyst and CPA at Annuity.org, suggests, “Talk with your advisor before making any changes to avoid reacting to a temporary market slump. Re-evaluate your long-term asset allocation and need for short-term liquidity. This gives your advisor a chance to clarify your portfolio’s short-term performance and emphasize positions that are meant to sustain you during challenging times.”
Understanding the reason behind your $45,000 loss is also crucial. Ryan A. Hughes, founder and portfolio manager at Bull Oak, points out, “Was this loss just temporary or a realization? Perhaps it was planned to balance out gains elsewhere? And how significant is that $45,000 in the context of your entire portfolio?”
With the financial markets performing relatively well this year, Joe Favorito, a certified financial planner at Landmark Wealth Management, notes that a loss shouldn’t be expected, but it heavily relies on your investment strategy. Yet, he reminds us of the sharp market decline that took place earlier in the year coinciding with tariff discussions. “Volatility is part of investing,” says Ryan Heiss, a certified planner at Flynn Zito Capital Management. “If your advisor isn’t proactively communicating or guiding you, that could indicate a deeper issue, which might warrant seeking another opinion.”
What to Consider When Searching for a New Financial Advisor
If you’re not comfortable discussing your concerns with your current advisor or if you can’t effectively communicate your losses, Block advises finding a financial advisor you can trust and getting a complimentary second opinion. He states, “Provide them with general financial information and details on your portfolio’s performance to identify any potential issues.”
It’s important to follow a fundamental principle: seek out a fee-only advisor to avoid conflicts of interest related to high-fee products. Ensure they’re a CFP, comply with fiduciary standards, and have the necessary skills, while also being someone you feel you can trust. Always ask for fee structures and income generation methods in writing, advises Segarra.
Heiss also recommends consulting with a CFP who focuses on retirement planning and asset allocation. The CFP designation requires extensive education, passing examinations, relevant experience, and adherence to fiduciary duties. For additional resources, you can consider platforms like CFP Board and NAPFA, among others.
If your main interest is simply portfolio management and not comprehensive financial planning, Hughes suggests looking for an investment advisor instead. He mentions that many firms may have different terminologies for similar roles, indicating that you might just need someone focused on managing your investments.
Favorito warns, however, against the idea of working with multiple financial advisors unless they are collaborating closely. “Having multiple advisors could lead to conflicting strategies, which might not be effective. Sometimes, you end up with disparate pieces instead of a cohesive approach,” he explains.
