Financial advisors get a bad rep. Thanks to an onslaught of memes they’ve become the butt of the joke. The punchline usually ends with unsuspecting folks being cornered to buy insurance under the guise of an ex-schoolmate reaching out to ‘catch up’ over lunch seemingly out of the blue.
Jokes aside, financial advisors do play an integral role in your financial planning. But how do you ensure that your chosen one is truly the real deal?
Here, we list out the red flags you should always watch out for.
But first, what does a financial advisor do?
Simply put, they help to organise your finances. Sure, they’ll dole out obligatory financial advice as per their job title but it doesn’t stop there.
After getting to know you and examining your financial profile, they’ll help to identify gaps in your coverage and recommend a financial plan that will help achieve your goals (eg. retirement at 50, starting a family at 30, etc.).
This usually involves managing your insurance plans and investments in tandem.
Red flags to watch out for when working with a financial advisor
1. Hard selling a product you said no to
One big no-no is hard selling. A good financial advisor should only recommend products to fill gaps and suggest alternatives if you don’t wish to purchase it.
What they shouldn’t do is insist on certain products or baiting you to buy with vouchers and gifts as incentive. Pressuring you to buy a product like their lives depend on it is not financial planning.
2. Slow to respond
Communication is key. While being at your beck and call is a little excessive, your financial advisor should at least be prompt in replying whenever you reach out to them with questions and feedback.
At the very least, it’s a good customer service practice to have in general. It also shows that you are not just another lead in their neverending list of clients.
3. Unable to explain a plan in layman terms
To quote the wise words of Albert Einstein, “If you can’t explain it simply, you don’t understand it well enough”.
Insurance policies can be complicated but a pro is able to masterfully articulate them in a digestible way. No one likes being a captive audience of a confusing lecture when all that’s required is a straight-to-the-point explanation.
If you find yourself leaving a conversation with your financial advisor with more questions than answers, this is likely an indication that they may not understand the policy well enough.
4. Hardheaded on own opinion
It’s incredibly frustrating to have your opinions fall on deaf ears. This is something you should never have to put up with in your discussions with your financial advisor. It takes two hands to clap for your financial goals to be met. Ideally, both of you should play an active role in your financial planning.
5. Skip through paperwork and claim disputes
Paperwork for insurance policies is usually quite complex and requires great care in processing them. Unscrupulous agents might take shortcuts to get it done the easy way.
This is — unsurprisingly — extremely unethical. Good financial advisors should do due diligence in processing applications and claims instead of skipping ahead.
Another tell-tale sign of a financial advisor worth keeping is when there are hiccups involving claims with your insurer. A proactive agent will act in your best interests to resolve any disputed coverage claims.
After all, they know you (and your medical history) better than the insurer.
Unfortunately, these signs may not be so easy to spot until it’s too late. Follow up closely on your pending claims to be on the safe side.
What to do in an SOS situation
If the above are qualities you find in your financial advisor, it’s best not to delay parting ways.
Look up your insurer’s customer service hotline and clearly communicate to them why you wish to change your current financial advisor. Your insurer should be able to assign a new agent to you. Be prepared to sign some documents to facilitate the transfer and you’re set.