Reassessing the Relationship with Your Chicago Financial Advisor

Like any important relationship, your connection with your financial advisor should hinge on mutual respect and trust with a shared vision of your financial future. Results, trust, communications, and transparency should be the cornerstones of this very important partnership.

As a high earner who has achieved exceptional financial success, your time is likely limited, so the quality of your relationship with your wealth management team is even more important. 

But there may come a time when you should re-evaluate this partnership, ensuring it remains in sync with your increasingly complex financial needs and goals. This evaluation is pivotal. It’s about assessing the real value of your wealth manager’s knowledge, advice, and services. A friendly personality is not enough when your financial future is at stake. 

This article will explore five reasons successful entrepreneurs, business owners, executives, and retirees change financial advisors. 

Let’s get started. 

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Change of Investment Objectives

The achievement of your financial goals is the foundation for a productive investor-advisor relationship. There can be several reasons why relationships between investors and their financial advisors deteriorate over time. Recognizing these reasons may be the difference between achieving your financial goals and coming up short. 

You and your advisor may perceive your tolerance or capacity to take risks differently. While you may see yourself as conservative, your financial advisor may expose you to excess risk to boost investment returns. In particular, if your advisor believes they (not you) have nothing to lose. That’s because they may believe they may lose the relationship if they don’t improve your investment returns. 

• Your advisor may be basing recommendations on a different horizon than yours. For example, you have some short-term requirements, and your advisor’s advice is based on longer-term horizons, so the money is not there when you need it. Sometimes, this is a failure to communicate effectively.
• There can be a misalignment if your primary goal is capital preservation and your advisor implements a riskier strategy. Some financial advisors treat all of their clients the same, even when there are some major differences. For example, they assume all 50-year-olds have the same goals and tolerances for risk.
• Some advisors utilize active management strategies, while others lean towards more passive strategies.  Active management may be trying to beat the market, which requires more risk. Passive management is trying to match the market based on index rates of return, which requires less risk.
• Some advisors might recommend proprietary investment products because they pay higher commissions or fees, which could be another example of a conflict of interest. 
• Your views on market direction (bullish/bearish) and how it may impact you could differ from those of your financial advisor.
• Your advisor does not fully understand your financial circumstances, concerns, and goals. The result is excess worry about your financial future. 
• Both you and your advisor are susceptible to cognitive biases. For instance, if your advisor has a “recency bias” (giving too much weight to recent events), they may make recommendations that undermine the achievement of longer-term goals. 
• Your advisor may be susceptible to pressures from management if they work for a large financial institution, such as a branch manager, senior management, shareholders, etc.

Communication Is Key

Frequent communication keeps financial advisors and their clients on the same page.  

Your advisor should be responsible for frequent communications, especially during periods of significant market volatility.  Some advisors may disappear during down markets because they don’t want to deal with the emotional concerns of their clients.

Advisors may also try to impress clients with investment jargon and are doing their clients a serious disservice. Effective communication is based on terminology that both parties understand.

As an experienced wealth manager in Chicago, we talk with clients daily about their financial concerns, hopes, and dreams. Our role is more than just crunching numbers. It’s about providing customized plans and wealth management solutions that have the highest probability of helping our clients achieve their financial goals.

The Trust Quotient in Financial Services

The 800-pound gorilla in the room is your ability to trust the advice you are getting from your financial advisors. Trust is absolutely vital. When it erodes, it is time to change financial advisors.

Be sure you tread cautiously. If your intuition tells you your financial advisor may not have your best interests at heart, it could be an important red flag that you ignore at your own risk. Your advisor should always prioritize your interests above everything else. 

Financial advisors who are fiduciaries must always act in their client’s best interests. This is the foundation of a trusting relationship. Ask your current advisors to document their fiduciary status in writing. It is best documented in their service agreement. 

Layers of Expenses

It is your responsibility to monitor all potential layers of investment expense. It pays to remember every dollar of expense is one less dollar you will have for your future use. 

Part of trust is being able to trust your financial advisor to disclose all of the expenses that are deducted from your accounts. You should not have to ask for this information. Your advisor should volunteer the information as part of their transparent relationship with you. 

Always insist on written disclosure for all fees, commissions, and transaction charges. Then, add them to determine if you are comfortable with the amounts being deducted from your accounts. Remember, there can be layers of fees based on who you select to advise you on financial matters. 

Investment selection is never easy. With more than 20,000 funds to choose from, knowing the best option can feel quite daunting. Fortunately, research shows us how to better analyze and filter fund managers and their strategies to a more optimal set for your portfolio. Taking our evidence-driven approach and engaging you in conversation to guide our process, we constantly evaluate the mix of vehicles, managers, and expenses within your portfolio.

Select a wealth manager that practices full transparency for all expenses. This is a part of the relationship where you don’t want surprises. 

The Bottomline is Results

Your financial situation is unique, so you should not be seeking a cookie-cutter approach to your financial future. 

Our wealth management services are based on custom-tailored planning and sophisticated investment management services for your working and retirement years.  We do not believe in one-size-fits-all solutions. 

At Cogent Strategic Wealth, our success is based on achieving our client’s long-term financial goals. But that is not all. Our results have to be consistent with the risk tolerances of our clients. 

We believe in full transparency for all of the information our clients should know when they outsource their need for wealth management services.

Our clients can trust our advice because we are financial fiduciaries – the highest ethical standard in the financial service industry.

Connect with us today to learn more about our wealth management solutions for highly successful individuals and families. 

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Cogent Strategic Wealth provides investment advice only through individualized interactions. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. © 2023, Cogent Strategic Wealth®