Monday, June 29, 2009

Leaving your financial planner

If you're thinking of replacing your financial planner with a new one because of terrible performance in this market, you're not alone. (Or maybe you'll consider doing it yourself.)

A recent survey by consulting firm Oliver Wyman found that the number of affluent investors looking to switch advisers has tripled in one year. According to Spectrem Group, a scant 36% of millionaires think their advisers performed well during the market turmoil of the past year or so.
Not so fast. This is a terrible market for just about everyone. Will you do better with a different planner?
"If you fire Fred and hire George, who's to say that George isn't even worse than Fred?" asks Jack Waymire, co-founder of the Paladin Registry, which matches investors with advisers in their communities. "They might just be trying to win your business, so there's a natural bias there. And if you ask for a sample portfolio, they're never going to show you a bad one. So you'll never really know what they've produced for an average client."
The story recommends getting an agreement from the new advisor that you're considering will evaluate your situation for a fixed fee with no commitment that you will hire him or her.