This is the fifth post in the 8-part “Taking Stock Of Your Financial Advisor” series, focused on the dynamic relationship between high-net-worth investors and their advisors. “Taking Stock Of Your Financial Advisor” is sponsored by OppenheimerFunds. See more posts in the series ».
One sign of a truly great financial advisor is their ability to stretch and mould your financial plan to fit your life for the long haul.
That doesn’t mean you’ll need a massive investment overhaul every year or even every five years, but the better-informed your advisor is of major changes in your life, the better she’ll be able to strategize and troubleshoot.
“Our objective, as advisors, is to be one of the top three people a client calls when a personal problem occurs,” said Avani Ramnani, CFP and director of financial planning for Francis Financial.
“We encourage our clients to call us even if they don’t think that the problem is financially related. This way, if we know about the problem, we can determine the true financial impact of that on our clients.”
The problem is, some of the most embarrassing troubles we face in life are exactly the sort of events financial advisors should know about. Here are few scenarios that would warrant a quick call to your advisor:
You’ve had a run-in with the law. Even something as innocuous as a speeding ticket could upend the carefully stacked house of cards your financial advisor has built for you. “If you’re in a potential liability situation, the advisor should be kept aware,” says Heather J. Swob, CFP and wealth advisory manager for Truepoint Inc. “While there are look-back provisions that might keep you from moving assets, the advisor can still provide some valuable advice.”
A family member is struggling with an addiction. You’d be surprised how much time and energy financial advisors put into protecting your assets from your own family. It may seem like telling your advisor about a son or sister’s drug addiction is delving too deeply in personal matters, but advisors need to know who in your family they should look out for. “Situations like this increase the risk that theft could occur and the advisor should be sure to look for strange activity in the accounts,” Swob said. “Additionally, estate documents should be reviewed to keep assets out of the [family member’s] control in the event of a sudden death.”
Your mental condition is deteriorating. Time is a crucial factor when it comes to developing a financial plan, and your advisor should know if your time frame has changed due to an illness or medical condition, especially if it affects your mental capacity. “We once had a client who kept talking about what a difficult economic time this is and how things were falling off the cliff,” Ramnani said. “On further inquiry, it turned out that he had been diagnosed with a health issue and was to undergo major surgery. We were able to talk about the financial impact of his conditions and actually had him make an emergency change to his wills.”
You and your spouse are sleeping in separate bedrooms. Again, personal matters are the last thing anyone wants to bring up with their financial advisor, but even minor hints that your marriage may be on the rocks constitute vital information. “If a divorce or separation is looming, the advisor needs to be made aware as there are several items to consider as you move forward in the process,” Swob says.
The bottom line: There are countless life changes that can derail even the most solid financial plans. Most advisors will make it their business to routinely check in on clients to see if their financial outlook has changed, but communication, as ever, is a two-way street.