Warning Signs of a Bad Financial Advisor P. 3

Continuing into part three of a series.

5. They Don’t Have Answers to Questions or Concerns

Beware if your advisor doesn’t get you the information you request about an investment. They should answer any questions that you have about how you’re investing your money.

My take -

Couldn't agree more.

4.Legitimate Monthly Statements

Your advisor should send you a monthly statement summarizing all that month’s transactions, including deposits, withdrawals, and current positions held. This statement must come directly from the brokerage firm that's holding your money, not from your adviser's office.

My take -

Well most financial consultants here will sell you mutual funds, variable life insurance products, as well as other insurance and pension products. If you are investing in bonds or stocks, chances are it's through the bank manager - friend or your stock broker. This being the case, then I'd assume that the statements will come from the bank or the stock brokerage firm.

If these are mutual funds, then you should be receiving statements from the mutual fund company unless you opted for online statements.

I can't speak for how scammers work though I'd think that these companies also send you a statement just to convince you that they are the real thing. I wrote a blog entry in the past on how to spot investment scams.

3. They Don’t Send You Quarterly & Annual Reports

You should receive quarterly and annual reports from your advisor. These reports explain the return your advisor is getting on your investments, as well as all fees and commissions. The figures on his/her report must match the report that is generated directly from the brokerage firm.

These reports should illustrate all the realized gains or losses (all the money you actually made or lost from selling an investment) and all the unrealized gains and losses (investments you own but have not yet sold and thus that have not yet realized a profit or loss). These reports should also include returns of the overall index. You want everything on paper

My Take -

I would like to believe that the mutual fund companies do send you these kinds of statements. For UITFs though, you'd have to record the gain or loss on your own. The NAVPU are reflected daily in the bank's website anyways.


Well I hope you are taking these lessons to heart. See you in the next entry!