Top 5 Signs Your Financial Advisor May Be Negligent

Selecting the appropriate financial advisor requires a lot of attention, and proper selection of a financial advisor may have severe repercussions.

Financial advice is lodged with your portfolios, retirement programs, and overall financial security. However, due to their negligence in carrying out their mandate they lead to a lot of losses with a bias towards financial loss. The ability to determine evidences of negligence ahead of time will assist one in preventing further loss of his or her property among other things. Here are the top five signs that your financial advisor may be tempting the fate of being negligent.

1. Lack of Communication and Transparency

Perhaps one of the easiest notices where negligence may have occurred is inadequate communication. A financial advisor should keep his clients informed, make them understand his approaches and himself answer their questions promptly.

However, failure to access an advisor, lack of clear explanation of any situation, denial of crucial information may be considered negligent. Any lack of transparency should make you suspicious that your advisor maybe working toward his or her benefit rather than yours.

For instance, if you have discovered that they do not do portfolio reviews often, or if they are arrogant with their portfolio review and decline to explain why they are selling a certain product or why this particular strategy is suitable for investment then there is a problem.

It’s not something which smart people choose to do; it is something which wise people are expected to do.

2. Failure to Diversify Your Investments

Diversification is a primary rule applied in financial management in that it invests in various products in order to spread risk.

If your advisor puts all or most of your money in a single type of investment of which you did not agree by risking your money, then your advisor Probe them for negligence.

For instance, investing all your portfolio in high risk shares or infrequently traded securities when you are about to retire is very reckless and may constitute a breach of duty.

A wise advisor will study your attitude towards the risk, and develop investment portfolio that will suit your requirements and timeframe to achieve those goals.

3. Ignoring Your Financial Goals and Risk Tolerance

A well implemented financial plan is one that fits you well in terms of the kind of income, wealth and professional aims to achieve over a certain period of time which is often referred to as your risk profile.

As such, if your advisor is using strategies that do not consider these aspects, this is a clear sign of dodgy business.

A careless counselor can advise an aggressive investor to undertake risky positions or propose tradable solutions for expected massive objectives such as retirement.

Your financial advisor should have the time to listen to you and find out your goals and what you require, it should not be a case of everyone is a candidate for this product.

4. Unexplained Losses or Sudden Decline in Portfolio Value

However, sharp and significant losses without any justifiable cause may well point to negligence on the part of the financial advisor especially when propriety investments are under consideration.

Market volatility is something to watch, but if your portfolio is performing poorly when markets are quiet or are even growing, there could be a problem.

Every advisor should be able to have reasons for low performance and ways of redesigning. If they cannot provide a plausible reason or worse still, they downplay such losses, this might suggest negligence or, worse, malfeasance on their part.

5. Conflicts of Interest and Unethical Behavior

Financial advisors are supposed to point you to make the right financial decision but sometimes these individuals may recommend something in their self-interest. These conflict of interest arise when the advisor gets an incentive or gets commissions from companies in products that they may recommend to the saver despite being unsuitable.

Still, some signs you can look out for include the following: If you realise that your advisor is always recommending high fee products to you, or if you feel that your advisor’s interests are being dominated by the commission he or she is likely to earn every time he or she is selling you something this may be classified as negligence or unethical conduct.

Be sure to find out any fees, commissions or other incentives that a financial advisor may be getting from the companies they are advising investors on.

Conclusion

It is sad that negligence from a financial advisor can cause a dent on the future which could be very fatal. Sidelined, unclear, non-fragmentation, no references or neglection of your goals and interests and self-interest.

If you have reason to believe that your advisor is negligent you should consult with Expert Civil Lawyer Perth to safeguard your assets and seek retribution for any harm done. Your financial future is something that should not be entrusted to an agent who may not be completely loyal to your financial potential.