Is Your Financial Advice Working? Contact our Sacramento Area Accountants
Its not hard to find advice on how to manage your money these days. You can find plenty of it on the Internet, in books, magazines and newspapers, from well-meaning friends and relatives, and of course, from professional advisors.
But while finding financial guidance is easy, judging the worth of it can be a much tougher task. Even hiring a professional adviser is no guarantee youll get great advice. If youre paying someone for a personalized plan, though, you especially want to make sure youre getting your moneys worth.
The true test is whether you reach your goals. But if your goal is decades away retirement, for example you dont want to wait until age 65 to see if you made the right moves.
I would encourage people to look at their overall situation no less than annually and assess the quality of the service theyre getting.
So what things should you look at? Ask yourself these questions when gauging money advice:
What are the numbers? The most obvious way to judge investment advice is by performance. But make sure your expectations are realistic.
If you have a diversified portfolio, youre going to outperform the worst asset class but under perform the best. With that in mind, dont look at just your pure rate of return. You dont have to be in the years highest flying mutual funds and stocks to succeed.
Instead, you and your advisor should quantify your goals when creating your financial plan.
That plan should include periodic, realistic mileposts to check your progress against. If your net worth isnt growing as fast as youd forecast, examine why. Maybe it was just a down year in the market. Or maybe youve been too cautions with your investments and need to make a change.
What does your gut say? Can you stomach the investment risk theyre taking?
The real key is to remain invested.
Some discomfort is normal. Youre not going to gain anything without taking risks. But if youre so nervous about the risk youre taking that you cannot stay invested, you need to talk to your advisor. If youre always buying at the top and selling at the bottom, you wont build wealth.
You also should pay attention if your gut feeling is telling you that your advisor isnt being honest with you.
If it doesnt feel right, it probably isnt. If your advisor doesnt listen to you, doesnt return your phone calls, does some kind of trading in your account that you didnt know about, you need to raise your hand and say something.
Have you been following the advice?
If you havent put your plan into practice, whats stopping you? If it is because the suggestions are too complex, and you dont understand them or they make you uncomfortable, talk to your advisor.
Why pay for counsel youre not going to use? If your planner wont listen, you may need to hire someone else.
Is the advice clear to you?
I really believe that the way an advisor speaks to a client is very important. Sometimes people who arent confident about something use lingo to make themselves appear to be an expert.
Also, its crucial for you to understand the money moves you are making and why youre making them.
We need to be responsible for our financial futures. If you abdicate responsibility and say So-and-so will take care of it you may find out when it is too late that so-and-so wasnt taking care of it.
Is your advisor a good listener?
Responsiveness is a key thing. Many people have questions. Are you getting good answers to those questions?
I would be concerned if an accountant said dont worry about those details. Just trust me. People are entitled to understand what they are doing and why.
You should feel comfortable enough with your advisor to ask anything.
Most of us dont want to embarrass ourselves or admit we dont understand something, but its very important to feel OK saying I dont have a clue what youre talking about.