If you pay a professional advisor to help you with your investments, you might expect that you'd receive better treatment now that the bear market has decimated your portfolio. Yet all too often, customers get exactly the opposite.
Lately, I've talked to a number of people with eerily similar stories. They call their advisors, upset at the losses they've suffered and looking for guidance on what they can do. In many cases, they get a brief response that doesn't make them feel better -- or even worse, they never get a call back at all.
A silver lining
On one level, that sort of response is surprising, especially given the recession and its huge impact on Wall Street firms like Goldman Sachs
But many investors have discovered that they don't get the same attention paid to clients with higher account balances. It's important for advisors to keep a hold on their wealthiest customers, who can make a big difference in their firm's profits going forward. A relatively small account with only a few trades here and there, however, won't get the job done.
The right response to such treatment? Walk out on your advisor. Either find another one who will give you the respect you deserve -- or better yet, take over your own money management and save money. With a discount brokerage account, you can make your own decisions.
Why it pays
Quitting on Wall Street firms pays off twice. First, you will likely see immediate savings on commissions and other account fees. You might not even have noticed all the fees your advisor charged you, but with them gone, you may see a difference.
More importantly, by picking your own investments, you can ignore some of the bad advice that created losses in the first place. For instance, take a look at some of the losers that big financial firms recently recommended to their clients:
|
Stock |
Recommending Firm |
Return Since Recommendation |
|---|---|---|
|
General Growth Properties |
Wachovia |
(96.3%) |
|
Alcoa |
Bank of America |
(82%) |
|
AK Steel |
JPMorgan |
(87.3%) |
|
Wells Fargo |
Credit Suisse |
(70.6%) |
|
Arch Coal |
UBS |
(75.6%) |
Source: Motley Fool CAPS intraday on Feb. 5, 2009.
Granted, not all of these firms' recommendations were this bad. But even the best stockpicking firms have trouble exceeding 50%-55% accuracy on their picks, and some don't even beat coin-flip odds.
What to do now
If you've decided that you're ready to give your advisor the old heave-ho, here's a roadmap for the next steps to take:
- Pay your bail. Many firms charge account closure and stock transfer fees when you move your account to another broker. That shouldn't stop you from switching, but you don't want to get blindsided.
- Deal with problem investments. Depending on your advisor, you may have some investments that are difficult or impossible to transfer. You may need to sell those, potentially causing a taxable event. That's more annoying than nickel-and-dime fees, but it's still worth it to get the customer service and attention you deserve.
- Pick a new place to invest. Word of mouth can give you the lowdown on good investment advisors. If you decide to go the discount brokerage route, our Foolish guide to brokers can answer a lot of your questions.
Often, simple laziness keeps people from switching financial advisors, even when they're dissatisfied with the advice they're getting. Once you make the move, though, you'll wonder why you didn't do it years ago.
More on finding the best broker:
- Why you need a broker.
- Ten ways to size up your broker.
- How to invest any amount of money.
