Should I Break up With My Financial Advisor?: Communication, Fees, and Finding the Right Fit

When's the last time you reevaluated your relationship with your financial advisor? This episode discusses critical factors like communication issues, alignment of financial goals, fee transparency, and the importance of a fiduciary relationship.

• Importance of regular communication with your advisor
• Adaptability of your advisor in line with your changing goals
• Understanding fees and ensuring transparency
• Seeking new perspectives and ideas from financial professionals
• Addressing ethical concerns and prioritizing trust in the advisor relationship
• Recognizing the distinction between general financial advisors and retirement planners

Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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Purchase Mark's Book, The Road Less Traveled: Turning Your Retirement Worries Into an Excursion of a Lifetime on Amazon.com https://a.co/d/4fx94Al

Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered

Visit masterplanretire.com to access our retirement checklists, podcasts, and schedule a complimentary consultation.
Call 770-980-9262 to speak directly with someone about your retirement planning needs.

https://masterplanretire.com/

Catch all episodes of our podcast at https://www.masterplanyourretirement.com/resources/episodes

Listen to Mark Fricks on Saturdays at 12:00 p.m. on XTRA 106.3 FM WFOM.
Sign up for one of our upcoming events at https://www.masterplanyourretirement.com/events

Purchase Mark’s book, The Road Less Traveled: Turning Your Retirement Worries Into an Excursion of a Lifetime, on Amazon: https://a.co/d/4fx94Al

Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.

Transcript

Speaker 1 0:06

Should you break up with your financial advisor? Hey folks, thanks for joining us. Welcome to Retirement Roadmap with Master Plan Retirement Consultants where today? That is the question should you break up with your financial advisor? Mark, there are a lot of different reasons. Maybe one should consider breaking up with their financial advisor.

Speaker 3 0:25

First of all, you kind of scared me with the old name there. Maybe turn the volume down, folks, I don't know. Yeah, sorry about that. So should you consider? Is that what you're asking? Should you consider? Should you?

Speaker 1 0:35

break up with your financial advisor Well.

Speaker 3 0:36

I think you absolutely have to evaluate anybody you work with, just like you should evaluate any insurance company you're using for automobile and homeowners. You always evaluate and want to see where you're at. Are you getting the best bang for your buck? Are you getting your needs met and we'll be discussing that today yeah, so, number one, some things to look out for.

Speaker 1 0:54

The first thing I want to consider is what's our communication like? Do we have poor communication? A good financial advisor should be accessible and proactive in discussing your goals, not just waiting for you to call him or her. Updates to market changes should be relatively clear as far as the communication there. If your advisor is unresponsive or only contacts during yearly reviews, it may indicate a lack of dedication to your financial well-being.

Speaker 3 1:21

It's kind of funny. Financial well-being it's kind of funny. So you know, being in the business so long, I've met so many advisors or brokers or whatever that they go silent when the market's down.

Speaker 3 1:32

You don't hear from them, you know, as opposed to saying you know, communicating via email, via phone call, via whatever, that this is what's happening, you're taken care of, or we have a plan, or we you know for this or whatever. But yeah, I've had people say I've not heard from my advisor all year, and it's a bear market and they're wondering what's going on, you know, and I guess they're just afraid that, you know. I guess the advisor's afraid that if they call them, the client may, you know, ask them something. They can't answer or say I want to move my money or whatever. But I think it's the opposite. I think staying in touch shows that you're on top of it and you know, we kind of talk people off the ledge a little bit too. You don't want to make rash decisions, absolutely.

Speaker 1 2:12

And everyone has. Every client has a different relationship with a certain advisor than the next as well. Some clients like to just cruise and then I'll call you when I need you sort of situation. But still, some feedback now and again is really critical for that communication. But I think really one of the key things that comes down to the communication is the very beginning of the relationship and building that plan is the education. I think that's essential for the building of the plan so that when, let's say in your example of an advisor being nervous to reach out because the markets are a little rocky, let's just let it pass through. Maybe the client understands why things are set up the way they are, understands a little bit more about the education behind the moves and it's a little bit smoother sailing in a long-term scope.

Speaker 3 2:58

Yeah, and I think that initial communication, through the initial planning meetings, you set up expectations. You don't promise, hey, we're going to make 12% of a year. You're going to say this is going to happen, that's going to happen, but if this happens we're going to do this. If that happens, we're protected. Again, it's educationally based and clear expectations of what to expect. We get very few phone calls when the market goes down or sideways or whatever, and when we do, we talk to our clients and we remind them of the plan and why we knew this was coming. There's always going to be a time when the market's down. There's always going to be a time when something's not working the way it should be working, but we know what to do in that case and they know what we're going to do in that case, you know what causes more phone calls than market volatility for us is articles.

Speaker 1 3:47

People come over. Oh, I saw this article. They heard this thing on the news or something and I got to do something about this.

Speaker 3 3:53

Investor pornography, that's right. Articles, whether it be an email, a newspaper. Do they have newspapers still?

Speaker 1 4:01

There are a few left.

Speaker 3 4:03

Or whatever they see this big headline and all they're trying to do with that headline is grab somebody's attention, usually out of fear, in order to get them to apply for something or sign up for something or buy something or whatever. And you know that's reactionary and just understand. I mean we had somebody we were teaching a class last night and somebody said that they had a friend, I think, if I remember correctly and said you should always turn on your social security at age 67. And we said what's that? Based on An article I read, or whatever.

Speaker 1 4:38

Actually no. The quote that she shared was you're stupid not to turn on your social security at full retirement age.

Speaker 3 4:45

Was that an article title? Yeah, but that's a silly, silly blanket statement, recommendation, belief or whatever. And just like we had somebody else ask. The other question was what is the amount of money you should have in your retirement nest egg to retire? I don't know, let's talk for a couple of hours and we'll figure it out. But you can Google that and you'll have in your retirement nest egg to retire. I don't know, let's talk for a couple of hours and we'll figure it out.

Speaker 1 5:06

But you can Google that and you'll have a dozen articles on the first page telling you the number you need.

Speaker 3 5:11

It's usually a million, I don't know why.

Speaker 1 5:12

But they're all blanket recommendations, taking so many assumptions. That just is not realistic for any individual.

Speaker 3 5:19

It's not. I love it when people ask those kinds of things. I'll just look at them and say I don't know. What do you need? How much do you have now? Okay?

Speaker 1 5:29

So the question is or the point is number one poor communication. If your advisor has poor communication with you, that might be a time to consider looking for a new advisor.

Speaker 3 5:40

Retirement planning and advising in general is just as relational as it is financial absolutely, as we've, I think, said before, the show is we get to know our clients.

Speaker 3 5:51

So, personally, I mean, I can't imagine working with a company where you dial an 800 number or they have 12 offices with 50 people at each office and you don't know who you're talking to, or they'll be there next week or whatever.

Speaker 3 6:03

As we've said before, we're a multi-generational family business founded by us, and it will continue on. But yet our clients know who's here, they know by name and somebody new comes on board, we'll introduce them to our clients, whether it be at an event, through email or whatever, and so we really become we call it the master plan family, because we really now we're not going to intrude, I mean, you tell us what you want to tell us, but it becomes, like you said, very, very relational and that way we can understand their thoughts, their fears, their goals and needs and we can come up with a better plan to make that happen by them sharing, you know again, their beliefs and their fears and all that kind of good stuff. So I think it's very important to examine who you're working with and is there that type of a relationship?

Evaluating Financial Advisor Fees and Transparency

Speaker 1 6:58

Yeah, that's good. Reason number two should I break up with my financial advisor? Misalignment of financial goals. Now, first of all, your financial goals may evolve. In fact, most likely they will evolve over time. Your advisor needs to be able to adapt their strategies accordingly. If your advisor is not adjusting their approach to meet your changing needs, it could be time to explore other options. A good advisor should be flexible and willing to tailor their advice.

Speaker 3 7:31

And I would go a step further and say a good plan has to be flexible. I can't tell you. I guess, probably once a week, we'll have an annual review or semi-annual review with a client and, mark, we need to talk to you about something. What's that? Well, our daughter has had a health issue, they're going to have to move back home and, with her husband and two children and they're out of work, and total change, right? Or we've decided that instead of staying in our house that we told you we were going to stay in, we're going to move to Costa Rica or we're going to buy a beach.

Speaker 3 7:59

I mean, so many things changed that they never really thought about until whatever. Just one night they're having dinner, maybe, or whatever may have happened. So it's not only just the big events like a spouse passing away or a long-term care need. It may be something again as simple as just something we didn't see. We have a list of about 15 things that can affect your retirement, and I don't even think that one's on there, the one I just mentioned.

Speaker 3 8:29

So, again, I guess a week doesn't go by that we don't have somebody saying something's changed, and so we need to be flexible. Maybe it's a short-term change, maybe it's a one-time lump sum change, maybe it's we've decided to put off Social Security because I'm going back to work, because I'm bored. There's so many things that can happen because I'm going back to work because I'm bored. I mean, it's so many things that can happen. And so what you said is very critical is that we have that plan, but it is not a paved roadmap that you can't turn off of. It is definitely has so many different directions you can go in, but we still want that direction initially and they will make adjustments as we go.

Speaker 1 9:00

I also meet in the middle a little bit for the advisor. The plan is not completely. Bit for the advisor. The plan is not completely solely on the advisor. There is something Now you cannot help emergencies or life situations that pop up but there are also responsibilities and disciplines on the client side, Sometimes, if it's budgetary or whatever, that need to be fulfilled as well. So that's just like creating the plan, implementing it as a two-way street as well.

Speaker 3 9:22

So that's just like creating the plan, implementing it as a two-way street as well, absolutely. And again, you know, I could probably count on maybe 10, 15 fingers of clients that came to us and the plan was really good but for whatever reason, those first two or three years of retirement they really took a lot of money out of their accounts and we had to kind of have some discussions with them. Now, sometimes you have to, but sometimes it's things like well, you know, we weren't planning on doing this, but now I think we're going to buy a boat or whatever and they do three or four or five different things. I can think of a client right now and they're kind of on the edge of. We really need to be careful the next few years and kind of catch up a little bit or we're going to have an issue down the road. So again, it's got to be flexible, but two-way communication and two-way responsibility, I think that's a good point, number three.

Speaker 1 10:08

Reason number three should you break up with your financial advisor concerns about fees and transparency? Now, this is huge, and it's also surprising how non-transparent these transactions can be. So if your fees are not justified by the services provided or there's a lack of clarity about how your advisor is compensated, that's a time that you need to start to reevaluate. Understanding how your advisor is paid is more important to maintain that their interests are aligned with yours.

Speaker 3 10:38

Yeah, and that comes down to some part with how they're licensed. Yeah, so you know, if they're on a commission type basis maybe a mixture of commissions and fees, you won't see those commissions, Unless maybe you read the prospectus, which is, you know, 800 pages long or whatever it may be. I have people look at me and say you know, my 401k at work is really cheap. It's a $50 fee a year. I hear that a lot.

Speaker 3 11:05

It's actually the opposite. It's one of the most expensive investments because all those mutual funds in there have fees built in that you don't see, and they could be a half percent, one percent up to 2% or maybe even a little bit more. And then there may be some other things. If you're using the life cycle funds, there could be a little bit of fee built in. That Government study says 401ks are one of the most expensive investments. So you've got to, and that's why I love the fact that, first of all, we don't use mutual funds because of the built-in fees and the lack of trading ability until the end of the day and they're just antiquated, right. So we primarily use stocks and ETFs.

Speaker 3 11:50

But, as we've said before, we, being fiduciaries, we are strictly fee-based, and that fee, when they get their statement from Schwab or the custodian, it's right at the top of the statement and it's based on the size of the account. So if it's a 1% management fee, we know it's 1%. And what's great is, if you make $50,000 in that account this year, you're happy, right, as a client, you're happy. Well, we're happy too. We want to grow because, number one, we make 1% of more money, but number two, we've aligned with kind of the same goals. We want these accounts to continue growing and growing. So very transparent in that respect.

Speaker 1 12:22

Yeah, advisors can charge differently and that's the nature of the industry, but it is crucial to understand how your advisor charges and, just as Mark said, it's a really great window into understanding a lot more about their business practices, based on their licensure and things like that. The way that they take fees or charge commissions will lead to more things more information about your advisor.

Speaker 3 12:43

Yeah, because, again, depending on that type of license, there may be a lower level of client care. We'll get to that in a bit, but that's absolutely right.

Finding a New Financial Advisor

Speaker 1 12:53

So hang on to that cliffhanger. But folks Stay tuned yeah stay tuned.

Speaker 1 12:59

I do want to take a moment to point you to our website, masterplanretirecom. There you can find multiple retirement resources, links to this show, retirement checklists, things of that like. However, the most important thing is there's a schedule now button. You click that, it takes you directly to our calendar. You can schedule your complimentary consultation with us in office in Marietta, georgia, or via Zoom. We got really good at Zoom a few years ago, along with the rest of the world. Something weird happened and it just yeah, that's right. So masterplanretirecom, or call us at 770-980-9262, extension 4. Mark, tell us a little bit about those complimentary consultations.

Speaker 3 13:38

Yeah. So today's show is about should you break it with your financial advisor? Okay, one way to figure that out is to maybe look at some other advisors that really get into retirement planning and kind of see is there a difference.

Speaker 3 13:51

And and you know, I think we present a huge difference. But what that complimentary consultation does is it sits down. You know, we sit down with the client, whether it be Zoom, face to face, phone call, whatever and we start with about you what are your goals, your dreams, your worries, your concerns, what's your fear? Is your fear running out of money? Is your fear whatever it may be? And then we gather some financial information still complimentary, very generic financial information and we run a series of reports. There's six, seven, eight reports we can run for you why? Well, we want to test where your weaknesses are. And once we know where the weaknesses are and what can trip you up, then we know what to attack.

Speaker 3 14:32

And so, again, it's a two meeting, complimentary meetings, and you also get to know us a lot better and kind of see, hey, this is different than what I'm doing now or my advisor now, whatever it may be. So I would take advantage of that. I mean, we do those, we do several of those a week and I love doing them. Evan loves doing them, getting to know everybody's story. Everybody has a different story. So, yeah, click that green button at masterplanretirecom and we'd love to meet with you.

Speaker 1 15:01

Should you break up with your financial advisor? Reason number four seeking a fresh perspective. If your current advisor is not bringing any new ideas or strategies, seeking a different viewpoint can be beneficial. A new advisor may offer new solutions that better align with your financial aspirations, and the first thing that I'll say to that point is the industry is constantly evolving, as is the world we live in, From legislation to economic changes. A prudent advisor must be in a continued state of learning.

Speaker 3 15:31

Yeah, and it's almost like getting a second opinion from a doctor. This other doctor has the same specialty, but maybe they keep up with education more, maybe they've been more recently graduated and they're up on some newer techniques, maybe they're an older doctor that's so experienced and they know how to approach. I mean, there's so many different reasons to look at a different from a different standpoint. We call it a second opinion here as well, and so it's not only education, like you just said. I mean, we're constantly having to look at new laws, new techniques, new products, new tools, but also, again, because of the conferences we go to, the continuing ed, we get new ideas, not just on the laws themselves, but there's a new tool that's come out that can do a better job of providing this or that. So let's explore that and introduce that as well. So I think it's just a no-brainer to take a look at another view of your financial affairs.

Speaker 1 16:35

Well, on my end, on our end. I also think it's fun with prospective clients who may already have an advisor or I've had several say well, we're trying out several different advisors, we're going to different meetings and stuff. I always ask them and I genuinely want to get the information from that advisor. I want to see what other people are doing. It really makes me curious, especially if I get to know these people and know their goals and where they're going and entering into the retirement planning stage. I really want to see what these other retirement planners advisors are suggesting, or what they're looking at versus what they're not looking at.

Speaker 3 17:08

Yeah, and it might be a good idea. It might be a bad idea, but we take the good ideas right. Yeah, I think you said that to someone last night in last night's class. Yeah, I said yeah reschedule and bring it with you.

Speaker 3 17:19

They were saying we're meeting with an advisor next, whatever Tuesday. They were saying we're meeting with an advisor next, whatever Tuesday, thursday, whatever it might have been. And so Evan said, well then, come and meet with us and let's hear what their ideas were and we'll share our ideas with you and we might learn something. And just like again, the conferences we go to, I mean they have six, eight breakout sessions a day covering everything. Yeah, we got techniques Next week, next week, yeah, and so it's again. Just what else is out there? If you were working with an advisor from 25 years ago because your dad or granddad worked with him, I can I can't guarantee, but I can be pretty sure that there's still a lot of stuff that's old coming out as opposed to some of the newer ideas. Maybe not, maybe not, but from people I've talked to, that seems to be more true than not. True, that's true.

Speaker 1 18:13

It's true that it's more true, it's not untrue, but it's true that it's more true than untrue.

Speaker 3 18:19

Now I have a headache, sorry for anyone who's driving right now.

Speaker 1 18:23

That's right. Should I break up with my financial advisor? Reason number five ethical concerns. So if you experience unethical behavior or encounter any red flags, it may be time to find a new advisor. Your financial well-being depends on a relationship built on trust and integrity. If you suspect conflicts of interest, which is we can go a long way with that conversation. If you suspect conflicts of interest or feel uncomfortable with their actions, prioritize your peace of mind. I mentioned earlier. We talked a little bit more about fiduciary versus suitability. One of the reasons for a fiduciary best interest of the client.

Speaker 3 19:03

And full disclosure.

Speaker 1 19:04

And full disclosure, avoiding conflicts of interest and or making them known are built into the license.

Speaker 3 19:11

Yeah, I think first of all, it's important to talk to them first and find out what they did and why they did it, Because maybe you see it as being, oh, they did this and that's wrong, and maybe I'm just trying to defend and not put everybody with the same paintbrush right. So get an explanation. Then you can go and say, well, that doesn't make sense or that's a red flag or whatever, and then you can go get a second opinion, not only interview other advisors, but also you could even run by what happened and maybe they can give you an idea on that as well. I had one client that talked to two or three advisors and they kept telling him well, you should have done this when you should have done that. And he came back to me and asked me about it and I said but did you tell them that this was happening and that was happening? He was like no, I said, well, you left out half the story.

Speaker 3 20:05

So then he goes. Well, I'm glad you did that now, type of thing. So do I think it's fair that you go back to them. And as far as the licensing goes, as we've said before, we have the highest level of license. It's a fiduciary license. We are required by law to act in the best interest of our clients and whereas a lot of advisors have a suitability license which basically says I don't have to do what's best, but just be suitable for you. I can't harm you, but it may not be the best thing for you because maybe I make more money over here or something like that, and plus, that's a commission-based license, the worst part is is there's some advisors that have both licenses, which I don't know how that works. What hat are you wearing today? I don't know. So maybe they flip a coin.

Speaker 1 20:49

So another thing to consider is if an advisor works for an asset manager, they're likely to they may tend to overuse the investment products that their firm offers. So advisors who work for mutual funds, banks and insurance companies they're required to recommend their firm's investment products first. Again, regardless of whether they are the best option. They just need to be suitable. So these advisors are always conflicted regarding the investment advice that they share.

Speaker 3 21:14

And that's what I love about being independent. I mean we can use so many different tools. I mean we can use so many different tools, so many different portfolios, and we consistently look at what is the best for this purpose. Perfect round peg for a round hole, and then over here we need the square peg for the square hole, or whatever it may be, and that having the ability to go out into the world and find what's best for the client, helps me sleep at night to be honest with you Generally, advisors who work for RIAs registered investment advisors they work with the entire universe of options and are generally conflict-free.

Speaker 1 21:53

So look for an RIA for your financial advisor and a fiduciary and a fiduciary. So a couple of closing remarks. Number one know the difference between a financial advisor and a retirement planner, especially if you are entering the financial planning phase of your life.

Speaker 3 22:09

Yes, if you're 50 or older and you haven't started working with a true retirement consultant on a holistic basis, you probably need to think about that sooner than later. Because you know, just working with somebody that invests money, that's probably fine if you're 30, 35 years old, but when you start looking at the mountain of retirement and all the decisions that have to be made, you know, try asking somebody at a brokerage firm when to turn on social security or how, how to have a tax strategy. Yeah, very rarely will they answer you because that's not their expertise. Their expertise is trying to invest your money. So that retirement consultant, retirement advisor, and again, if they're not covering every facet of retirement, about 15 areas that you can look at, then they're not a true retirement consultant.

Speaker 1 22:58

Yeah, and there are different terms, now that you'll see whether it's holistic retirement planning we really like that term, comprehensive retirement planning but it's important that they look at the full picture because one change in one of these areas dozen plus areas will inevitably affect the others at some point.

Speaker 3 23:15

Yeah, I know of a firm and I certainly would not name them, but they're called something like wealth, something another, and basically they sell annuities. That's all they do, but you feel like you're getting wealth management or whatever, and so I just think that's misleading personally. But again, going in and interviewing, talking to them, what else do you do? Can you help me with this that? What about long-term care? Should I buy a policy? Should I use another tool? So so many different areas to look at.

Speaker 1 23:43

Financial advisor. The title can be a blanket term for a lot of different financial professionals. That's not necessarily a retirement planner or an investment advisor, things like that. So keep an eye out for that. Be careful of the title.

Speaker 3 23:55

So we're out of time. Folks, glad you joined us. Master Round of time. Folks, glad you joined us.

Speaker 4 24:02

MasterPlanRetirecom and until we see each other again, plan well and prosper. This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to MasterPlanRetirecom or call 770-980-9262. Thanks for listening.

Speaker 2 24:34

And remember plan well and prosper of our qualified representatives prior to implementation. Advisory services offered by MasterPlan Retirement Consultancy. Registered investment advisor in the state of Georgia, mark Frick's and MasterPlan Retirement Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.