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When to Break Up with Your Financial Adviser: Five Red Flags Every Entrepreneur Should Know

When to Break Up with Your Financial Adviser: Five Red Flags Every Entrepreneur Should Know

A great relationship with your financial adviser is a bit like a relationship between partners on an episode of The Amazing Race. The two of you should work as a team, outlining the terrain of your life, plotting your goals and objectives, identifying the obstacles and plans to work around them, and celebrating your success. That’s why it’s so critical to pick an adviser you believe will be an excellent teammate. You want an adviser who understands important checkpoints for your business, because if you miss one ­­— whether it’s minimizing your taxes or ensuring wealth protection ­­— you could lose the race.

In his book, Being Mortal, author Atul Gawande, a surgeon and professor at Harvard Medical School and the Harvard School of Public Health, describes three kinds of doctors: paternalistic ones that tell patients what to do; informative ones who outline all the options available but who doesn’t assist you in making decisions about your care; and interpretive doctors who provide you with information and help you focus on making the best decision for you. Interpretive doctors are on the journey with you.

Financial advisers can be similar in their approach with clients. Some tell you their strategies and expect you to follow them without question, while others are informative but fail to help you fully understand the strategies they implement. An interpretive adviser takes you through a process that educates you on all your options, and then helps you sift through the noise of the market with the goal of serving you and your family. When it comes to aiding your company financially, an interpretive adviser provides the most value.

Maybe you’ve been working with a financial adviser for a while. Which category do you think fits your adviser’s style? If you’ve been having doubts about the quality of your financial adviser, here are five more warning signs that it may be time to “break up” and find the adviser who’s right for you.

Does Your Adviser Talk More than Listen?

An excellent adviser is not one who pontificates; rather, one who listens deeply, trying to understand your situation, goals, hopes and dreams. If you find yourself doing all the listening, and struggle to understand the relevance of your adviser’s counsel, you could be ready for someone new.

Does Your Adviser Take a Holistic Approach to Your Finances and Provide Integrative Solutions?

Numerous advisers employ a traditional approach, focusing solely on one or two aspects of a client’s financial picture. Integrative solutions are synergistic: They look at a client’s finances as a whole, and integrate tax, financial, and investment management.

Does Your adviser Have the Expertise to Know and Understand the Best Ways to Take Advantage of Taxes?

Some advisers, even if they are CPAs, are prohibited by their compliance departments from giving tax advice. Others focus strictly on tax preparation. A failure by a financial adviser to consider tax burdens and brackets has the potential to severely impact your retirement and the estate you leave for your kids and grandkids.

Is Your Adviser Trustworthy?

You can check online to find out if clients have filed any ethical violations against a financial professional, whether they work as a broker and/or as an investment adviser. FINRA protects investors and safeguards market integrity with its BrokerCheck service (https://brokercheck.finra.org). The U.S. Securities and Exchange Commission’s Investment Adviser Public Disclosure website (https://adviserinfo.sec.gov/iapd) also lets you check to see whether your adviser has been the subject of complaints or regulatory actions.

Is Your Adviser Working in Your Best Interests?

While some financial advisers are required to act as fiduciaries for their clients, others must only follow a “suitability” standard, meaning that they believe whatever they recommend to their clients is “suitable” for them. Because the word suitability has a ring of trust and authenticity, may people don’t understand there’s a big difference between the suitability standard and the fiduciary one. The medical profession has one standard: “Do no harm.” But the financial world has two, and the majority of the public doesn’t know that the suitability rule is a lower standard of care.

There’s no doubt that the financial industry is a complicated business. If you feel stuck when it comes to wealth management and planning, be assured that it’s not an uncommon experience. If you see “red flags,” it may be time to rethink your relationship with your adviser. As an entrepreneur, you need a trustworthy fiduciary who enables you to let go of the burden your finances may place on you. The result? You get to focus on what matters to you ­­— your business, your family, and your goals.


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by Wayne B. Titus III // Wayne B. Titus III, CPA/PFS, AIFA founded AMDG Financial and AMDG Business Advisory Services in 2002 based on his 15 years’ experience at two large accounting firms working with Fortune 50 clients. He dove into entrepreneurship to make a bigger impact on people's lives. As a fee-only fiduciary adviser, his loyalty is to his clients: he places their interests ahead of his own or his firm’s. With assets of more than $150 million, AMDG Financial integrates tax, financial and investment strategies to help clients make financial and life transitions successful on purpose. The company's credo is, "From financial wisdom, better stewardship.” His latest book is The Entrepreneur’s Guide to Financial Well-Being (Lioncrest Publishing, March 2019). To learn more, visit amdgservices.com.

Opinions expressed by contributors are their own.