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  • Writer's pictureCaplo Advisory

5 Warning Signs You Should Look Out For in a Financial Advisor!


1. They tend to talk a lot more than they listen!

Especially in that initial meeting. While it's understandable that they want to share insights about their practice, the main focus should really be on understanding you. If they're not delving into your goals, needs, risk tolerance, financial history, family situation, and concerns, it gives the impression that they're not genuinely getting to know you or determining what would be in your best interest.

2. Then there's the whole promise of "beating the market."

If they're consistently outperforming the market, you might wonder why they're not already living it up on their private island. With thousands of analysts closely monitoring it, quick reactions to new information result in prices adjusting promptly. While occasional market outperformance can happen, achieving it consistently, like Warren Buffett, is quite rare.

3. When they strongly advocate for managing your old 401k, it's worth being cautious.

While many advisors may offer reduced fees for employer retirement plans due to limited investment options, pushing for a rollover should be justified. If they can't clearly explain the benefits, such as limited choices or high mutual fund fees in the old plan, it might indicate a motive to earn extra fees.

4. They're hesitant to show credentials.

Verifying the credentials and registration status of your financial advisor is crucial. Reputable advisors are usually forthcoming with their licenses and take pride in being registered with the appropriate regulatory bodies. If they're hesitant to provide this information, it's a cautionary signal.

5. Finally, if you come across a series of complaints or negative reviews from other clients, that's a significant red flag.

While one complaint may not be overly concerning, consistent dissatisfaction among clients should prompt a second thought. Conducting thorough research on internet forums, review websites, and regulatory agencies can provide valuable insights into your advisor's reputation before making any substantial decisions.

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