Awhile back, I was approached by an online brokerage company about considering the use of an outside portfolio manager. The broker had developed a list of approved firms and I spoke with a few of their representatives. One represented the dark side of paying a fee for assets under management (AUM).
One of the weirdest encounters I have had with a financial adviser was a sales call after the completion of a financial plan. Though the adviser had championed the concept of prudence in financial decision-making, the adviser’s assistant called to ask me whether I wanted in on a high-flying tech stock mutual fund.
One of the problems that I have experienced with financial advisers is their quickness to judge me and failure to understand my point of view. When evaluating an adviser, I look for someone who offers insights on complex financial problems. I don’t mind being pitched an off-the-shelf product but want to hear why it’s ideal for my unique circumstances. I shy away from those who seem to force an ill-fitting solution as appropriate for every situation (and demean me if I disagree).
To test the local advisers’ skills and integrity, I worked with my initial contact to execute the rollover of a 401(k) plan to an IRA; and then make investment recommendations that I either approved or rejected. Based on recent successes, the adviser seemed confident of recommended investments and their superiority to other choices.
I didn’t mention to the sales rep that I had a significant amount of money in an IRA in a separate account, possibly available for management for the right person. Again, my goal was to evaluate the adviser’s integrity and knowledge and then possibly expand our relationship.
Initially, I was pleased with the service. The rollover was completed and funds invested. But when another adviser replaced my initial contact, a new and improved recommendation was made. I was happy to test this new person’s investment savvy. But later I felt that the change in investments may have been contrived just to generate a sale. The investment did not seem superior and the adviser did not maintain the relationship.