Do You Like--or Hate--Your Financial Adviser? Tell Us Why

Posted by: Lauren Young on January 8, 2009

More investors switch financial advisers in down markets than up markets. How do you feel about your financial adviser these days? If your adviser is in the doghouse, he or she has plenty of good company: A new survey of millionaires conducted by the Spectrum Group found that just 36% of respondents are pleased with the performance of their financial adviser.

It’s no wonder so many people are questioning the value of financial advice, thanks to the recent market meltdown as well as the Bernard Madoff scandal. We’d like to hear what you think. We are asking readers to share their experiences and collaborate with us on a story about financial advisers. Your ideas, tips, and comments will influence upcoming BusinessWeek coverage.

To get the ball rolling, here are some things to think about: Did your adviser do a good job of preserving your wealth in 2008? Or, did your financial confidante perform so dismally that you are thinking about breaking it off and finding a new money maven—or, perhaps even managing your money yourself?

Keep in mind that there are some 650,000 people out there who call themselves an adviser and they come bearing many different labels: financial advisers, financial consultants, financial planners, and registered representatives. How did you find your adviser? Did you hire your adviser on the recommendation of a family member or through the financial planning service offered by your employer? Did you do any sleuthing before you forked over your money? If so, how did you size up an adviser’s education, experience, and credentials? Finally, if you’ve switched advisers, let us know why, and how you managed the divorce.

We look forward to hearing from you. If you need some good advice on managing your current financial partnership, check out Finding Somebody to Trust.

Reader Comments

j.jamieson

January 9, 2009 6:40 AM

I told my advisor in august 2007 that the market was a fraud and stocks would crash in 2008.He sent me reams of info from TDAM fancy graphs etc.& told me that I was dead wrong.Lost a bundle and wonder if I should sue the bastard.

Mike

January 9, 2009 11:43 AM

Advisor: John Bogle, Vanguard Founder.
Been with him about 20 years.
Cost: Less than $50 for his books-- Bogle on Mutual Funds;
Common Sense on Mutual Funds.
Results: 200% increase in assets using index funds, including current bear market.
Decision: I'll keep Bogle.
Peace

retired at 24

January 9, 2009 12:51 PM

Most of them will be bankrupt based on their bad advice, never listen to them im up 6500% last 10 years

Kingfish

January 9, 2009 1:47 PM

Most financial advisors follow the herd and don't have a real investment strategy that will outperform or save investors from the kind of meltdown we have experienced in 2008. The stock market training at brokerage firms is non-existent except for how to increase commissions and fees. Don't be a sap. Do your homework on investing or stay out of the arena.

sayrock

January 9, 2009 1:53 PM

The best financial advice I ever got didn't come from an advisor at all, it came from a book called The Big Gamble: Are You Investing or Speculating? The book shot holes through all my old concepts about investments. Too bad all so-called advisors aren't recommending this to their clients so they can get the straight-scoop before they give up their money. The bottom line: You are NEVER "investing," it's all speculation, pure and simple.

Don't mean to sound like a sales pitch, but Donald Trump himself gave the book high marks. More stuff about it here: www.financialspeculation.com.

Tim

January 9, 2009 10:07 PM

Lost a bundle with a planner and being diversified. I know people managing their own money that lost more than I did.If my planner lost less money than your guy, does that mean i have a good one?

RJB

January 10, 2009 8:10 PM

My broker really blew it during the meltdown, my broker quit on me - by the time they had me reassigned (a week later) I lost >$1 mil - when I discuss accountability - they do nothing ... incredible irresponsibility!

Rayman

January 11, 2009 10:57 AM

I agree the market is not much more than a casino these days, except you have a better chance at wining. All I use advisers for is to further my education. I listen to there advice, but realize they are pushing funds, products, or a certain model dictated by the firm they work for, so I take most of the recommendations with a grain of salt. They still know things I don't know, but in the end, I use my knowledge from BUSINESS WEEK to make most of my decisions. So it's you guys that better be careful what you print. LOL.

Bodz

January 11, 2009 5:58 PM

I agree with Mike, just read Bogle's book and you won't need a financial advisor. Jeremy's Siegel's "Stock's for the Long Run" is also a must read. My advice is invest only in index funds. Actively managed funds, for the most part, exist only to shake you down. Be a contrarian - invest in stuff that has a terrible 10-20 year record, such as the stock market of today. When it comes to domestic mutual funds, and Bogle would agree, you only need one - Vanguard Total Stock Market Index.

Diversification

January 12, 2009 11:30 AM

The old adage "diversify" was key for us. After watching a portion of our retirement in the market climb and climb and watching a portion of our portfolio earn meager earnings in low risk CDs. We resisted the strong urge to put it all in stocks and mutual funds. Thank god! We lost about 14% total for last year, and are continuing to see our best investments earn 5%. We pulled all money out of mutual funds early last year and invest only in handful of high quality stocks. We've used Morningstar as our tool to research and analyze.

Lauren Young

January 12, 2009 11:54 AM

Thanks everyone so far for your comments.

RJM: I took out the name of your brokerage firm, but I wanted to follow up with you. I’d actually like to hear what happened because it could be good fodder for the story we write. (Naturally, I would need to talk to the brokerage firm, too.)

Have you filed any formal complaint yet with the Feds or your state?

Feel free to email me at lauren_young@businessweek.com

Squeezebox

January 12, 2009 4:19 PM

I have a B.S. in Finance. I work as an accounting clerk and spend more than I save. My 401K was invested in the S&P 500 fund and Wilshire 5000 funds, but I switched to a more balanced lifecycle fund. Good thing. A year later, the market tanked. The diversification slowed down my losses, but we all got creamed by systemic risk. The best online financial advice I've seen is the Motley Fool. I'm proud to say my gains and losses are my own fault, not some salesman's. If I had paid big loads and commissions, it would just have added insult to injury.

ccollins

January 13, 2009 9:57 PM

i signed up with a supposed reputable company for their supertrader program claimed to make lots of money in the past. in dec2008 i followed evey recomended trade and lost $7,000. talk about useless advice. i would have been better to do the opposite of what they said and the sad part is it cost me $500 for bad advice and they won't refund it!

Rick

January 15, 2009 8:27 PM

Like many of you I glean info from the internet and common sense. I don't chase trends, I believe in Index Funds and Target Funds(looow fees), and cash and CD's. Took me 32 years to get what I got and I'm not about to pay someone 2-3% a year to loose it. Do'in just fine in Kansas and not getting greedy.

William

January 16, 2009 5:47 PM

My IRA is in a balanced fund at Vanguard with a low expense ratio. About 30-40% bonds/fixed, and about 60-70% equities, with minor foreign exposure. Yes, I have been hurt with this poor market, but not nearly as bad as most funds.

Midwest

January 16, 2009 7:14 PM

I managed my own 401K to less than a 1% drop last year. In October of 2007, I moved my funds into the 2 safest funds my 401K offered, including a bond market indexed fund, and left the money there. My worst loss throughout the year was 4.5% but it came back to .83% down for the year. If you couldn't see the slowdown coming, you deserved what you got. It was staring us all right in the face in mid-2007. Remember, if it's too good to be true, IT IS. But, I still got laid off because my company couldn't see the coming consumer spending slowdown and they jacked 250 of us out on the street last week due to dismal sales.

OldTimer

January 19, 2009 9:04 PM

Advisers to what end? Some creepy game that is essentially played in a pseudo-casino environment? That is, leeches sucking the blood out of our commonwealth thereby creating failure by necessity. These folks are the greatest insult pawned off on an unsuspecting public by the supposed advances in finance. This comment, by the way, comes from an economist who does his own thing. And, I did get my numbers doing so in a morally defensible way. We need to get the whole market focus back away from the gaming bias brought on by extensions from the CBOEism, OTC, etc. (a long list). In short, anyone who looks for returns beyond some reasonable level (we can debate this, but it is not over 10%) is basically pocketing ill-begotten gains. Realizing this will require better accounting, modeling, oversight, and much more. Sorry to rain on the parade of those who gloat that they won in the very unstable framework that we call the market - fictitious capital, indeed.

Michael

January 20, 2009 9:30 PM

I saw this coming 21 months ago in Mar07 when the chinese market fell 5% in one day with the US market following the next. The signs were there. I pulled all my money out of the market and put them in Treasury Notes making a lousy 3.5% a year. Well I am up 6-7% now since then. How many would love that. Pull your money out of the market. When SP drops to 600 put it all back in and ride the next wave back up to 800. That is what I am going to do. Only way to recover any funds in this environment. Long term recession with nice 20% rallys throughout. Be smart quit listening to financial analysts.

Edwin

January 21, 2009 6:33 PM

I'm with TD Canada Trust up here in Canada. I talked to my broker in January 08 when the markets took a dip (TSK went to around 12k) and literally fought with him to sell MY entire portfolio and convert it into USD. I then invested it into safe GIC's. THe TSX (main Canadian index) recovered and went up to around 15k by August. He'd send me fairly nasty emails saying I was chicken etc. I ignored his requests to get back in as I had an uneasy feeling in my gut. Sure enough, the whole thing went downhill starting in September. I feel so relieved I got out just before the slide really took hold. My conslusion: most of these advisors r useless. They only worry about the commission every trade gets the bank and if the client loses $, who cares?

Cindy

January 22, 2009 6:49 PM

I'm reading all the comments and they're upsetting my stomach! Can I really believe some of them who say they've experienced only minor drops or even those who are up? I thought the 40% drop in my and my husband's funds were standard fare these days. We did use an f/a who retired from a reputable bank and starting advising clients part-time while simultaneously enjoying his retirement. He was fee-based. It's a classic example of how when things were good, we really didn't need to hear from him except for a few times a year. When everything tanked, he was nowhere to be found and the silence was deafening (guess there wasn't any wireless where he traveling). I remember us asking him to increase our cash position about 18 months ago but he was reluctant to do so. I should have insisted. I also made suggestions about getting out of managed funds and into more Index funds but he always had a story about why this was a bad idea. We've since switched to someone in a brokerage firm (fee based) who is an acquaintance of my husband. I am planning to be more forceful with our new advisor. But here's the bottom line: There's some much I don't know about the financial markets that I could make a study of it for the next 20 years and I still wouldn't trust my judgment. And where am I going to find the kind of time to make this study? I'd need another 6 hours to every day to make this happen. So - I'm stuck having to rely on someone else's expertise to help me and my husband have a comfortable retirement. One thing I promise myself, though. Even if I feel stupid and have to ask this guy a million questions about the strategy he's going to propose, I absolutely will do it. Armed with some knowledge - from places like BusinessWeek, I will become a more active investor with my investments.

Matt

January 23, 2009 9:35 PM

Response to everyone but Cindy more specifically. These message boards don't represent the average experience out in the world, it's a relatively small sample set. A 40% average loss is probably about right, for those that had significant holdings in stock. Echoing many of the comments here, I too saw a slowdown coming and asked my "advisor" about getting on the sidelines for awhile. While we didn't have an outright argument, he told me similar reasons why I shouldn't cash out my holdings. And unfortunately, I was not forceful enough, left the money in, and took a beating similar to everyone else. I've come to realize a few things. First, his motivation was purely to keep the money "under management" so that it would keep generating fees. Second, "financial advisors" are, for the most part, just sales people pushing the products of the firms they represent. They may know more about the industry, but that doesn't mean they know any better than you how to invest. After all, many of them lost just as much (and if they didn't, that means they pulled their own money out, which is truly maddening). Finally, you don't need to understand the entire financial marketplace to manage your own money. Over the long term, 85% of funds do not beat the indexes. So buy low cost index funds, and trust your own instincts about where the market is going. I'm not saying you should day trade with retirement money, but this slowdown was very obvious and easy to avoid, if only I managed my own money and didn't listen to someone who has a different incentive than I. I agree with many of the comments on this subject: slow, steady, and not greedy is the way to go.

A

February 4, 2009 7:26 AM

I hate my financial advisor. I put in a large amount of money in last year about march or april. It was never suggested to me or even mention that the market would fall so hard. I understand that they can't forsee allot of this. BUT these people are suppose to be one of the best in the country and NEVER once did they say any like let's wait just a short period and then we will get in, or even I don't have a good feeling about what's going on what do you say about holding off? These are the best and greatest?? Are you kidding me???? I've lost over a 300k in less than a year and I am sure most of you have lost even more. I would not even be saying anything if they even just waited a month to take my money but no they took it as fast as they could and not once blinked. It's a bunch of bull crap, they are working for me? I think not they are only working for themselves selfish, greedy people who don't deserve to have anyones money.

Anne

February 13, 2009 1:36 AM

My mother died in Dec. She had been trying and then I got on board, trying to get a big picture form her financial advisor from August of 08 until the time of her death. He ignored her requests for info, my requests for info, and the request of her tax accountant, all with the proper documentation.

Her attorney who wrote up her will in 08, was recommended by the financial advisor.

After my mom died I got an email from the attorney telling me he was going to have the financial advisor to send an overview of mom's stocks. I told our tax
accountant this and he said it was usually the family or the executors who did this, not the attorney.

For probate this attorney was able to get a comparative study of mom's investments over the last year just by picking up the phone and calling the fiancial advisor for it. This was even before the death certificates and the letters testamentary were issued.

When the death certificates were issued he told me to send HIM the certificates so that he could send them to the financial advisor.

An acquaintance who used to be a stockbroker told me that a financial advisor or broker is NEVER allowed to release any information without the proper documentation- no matter WHO is asking for it or why.

Is there something here?

In addition the advisor allowed my mom's stocks to go down 40% . She had everything in stocks. Everything.

thanks,
anne

He also questioned why the attorney seems to have a direct pipeline with the financial advisor

Phyllis Setzer

March 8, 2009 9:34 PM

My mother changed financial advisors;the first had charged her $500 a month for years and did nothing but loose money. She then changed last summer. The guy immediatley charged her ,$3,500 and said he would do a better job then the other guy. My mom is 91 years old and had 4000 shares of Wachovia and 2000 shares of Bank of America;he did not tell her to do anything except keep the stocks she had.When Wachovia went to $16.oo(it had been as high as $60), I told him it needed to be sold. He said it was too much of a loss to sell and he was telling people to buy it. I went to see him when it got so low that Wells Fargo was going to take it over. I said you lost it all;he said he had clients who had lost a lot more in Wachovia and that he was listening to Cramer for advice. He was not even concerned that he had lost it all. Then, he lost the Bank of America ;she had 2000 shares of it. He took her money and did nothing and she lost her life savings.My dad had worked hard all his life as a pharmacist and left my mom in very good shape;she had almost a million dollars and now has about a 10th of that. These two men padded their own pockets and she ended up broke.

joe

April 19, 2009 5:31 PM

i lost 200k because my guy kept saying hold on it will come back long term when i finally stopped the bleeding at market 7500 and flipped to a money market the guy wont return my call i am going with a different company

farfaraway

September 3, 2009 12:57 PM

I do not have a 401(K) a pension
or a mortgage. I opened an individual
US Treasury account which anyone can
do and bought bonds directly, all sorts
EEs, HHs, inflation protected, and just
when I became cocky, I opened a TD
Ameritrade, had some fun gained some
lost more, basically ended up with a
small capital loss. You know what's worse
than having a non-caring, commission
hungry broker to blame for mishandling
your money? Having no one to blame but
yourself. But you learn. Invest in DRIPS
MUNIS, or just try to protect what you have. Read about any fund FIRST.If the
company does not have online access to
look up fees and expenses on each fund,
or its all under "unit cost" and prospectus reading, Time to roll it over. good luck and good bye

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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