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5 Occasions When You Should Ignore Your Financial Advisor – Blog 146

informed decisions blog

5 Occasions When You Should Ignore Your Financial Advisor – Blog 146

15th June 2020

Paddy Delaney


This week I share with you 5 instances where you should seriously question the advice you get from your financial advisor, and some questions to ask to help explore the suggestions!

Now, if you’ve got a good one whom you trust, your Financial Advisor can be the difference between you having a successful financial life, and not. But if your advisor gives you a bum steer that you act on, the impact of that could be significant on your long term financial success.


I absolutely know I am not perfect, and am happy to admit that, but I am pretty clear on my principles, on the key technical aspects of my role, and clear in what we do and don’t do for people we work with in Informed Decisions.

An example of the principles; we never say or recommend you do something that is not in the interest’s of a someone we work with or potentially will work with. That might sounds fairly trivial and standard, but living to this principle is easier said than done. There are times when it would be in our interests, more convenient, more lucrative or just plain easier to not do so. As a result, there are advisors who don’t do it – who instead take the easier, more lucrative, more convenient route.

The majority of financial advisors have the character and the competence to stay on-track and to help you do likewise, in which case you should listen to them all day long.

If they veer off-track, ideally you will recognise when they do, to allow you have a clarifying conversation with them before you make a decision to act. In no particular order here are 5 occasions where you might choose to ignore your Financial Advisor’s suggestions, or at least; to ask the question; ‘How does this stand to tangibly or otherwise benefit me?’.

#1 Majorly Adjust Your Investment Portfolio:

Unless your plan has changed dramatically any recommendation to majorly adjust your investment portfolio. For example, to alter your portfolio from 80% Equity/ 20% Bonds, to 50% Equity/50% Bonds. This is moreso your advisor’s fear manifesting itself in your portfolio – which is unlikely going to deliver your long-term results. Likewise, a suggestion to alter your portfolio from 50/50 Equity and Bonds, to 80% Equity and 20% Bonds is driven by an emotion as opposed to some firm logic. If the suggestion is made as they think ‘there is value in the markets’ or some such ‘crystal-ball nonsense disguised as adding some sort of value to you’, then it should largely be ignored. They are playing ‘timing games’ with your future wealth, and that’s not what you hired them for.

Assuming you initially established your portfolio with logic, unless your plan or goals have shifted dramatically, a major alteration is not typically a beneficial thing to do. In this instance you should be the one to talk your advisor in off the edge.

#2 Move Your Pension or Investment:

Unless there is high probability of you achieving a tangible benefit, then this is a sales-driven suggestion from your financial advisor. Unless your existing advisor can demonstrate a tangible benefit in moving your existing pension or investments from insurance company A to insurance company B, don’t entertain it.

Tangible benefits such as improved transparency, reduced fees or major structural changes are the only real benefits to you. If they come knocking and say ‘hey, insurance company B have developed this great new range of funds that do x, y and z’ then you can be pretty sure the motive is not your financial well-being, but the couple of percent initial commission that they stand to get from company B when you move your funds across.

Our recent article in Blog 140 was about the commission payments available to commission-based advisors and outlines how all of this works. It is easy to see why they might suggest you doing so.

I was speaking to a trustee last week and she observed that, as things seem to be quiet for a lot of traditional commission based advisors, the trustees have seen an increase of cases of financial advisors moving their clients’ pension pots from one provider to another, with their consent obviously. There may be valid rationale, but often it is done purely to generate new sales and income – as opposed to generating any massive tangible benefit for the client. This type of practice, or ‘Churning’ as it is known, is unfortunately alive and well it seems.

If your existing advisor approaches you with a suggestion to move your funds from the company A to company B – ignore it, unless there is a tangible benefit to you in doing so. If the proposed ‘benefit’ is ‘free money’ in the form of ‘extra allocation’, then it is highly likely that you’ll pay for that in the long run too – be very clear in asking for rationale for such changes.

Speaking of changes, Central Bank of Ireland have changed how they communicate their message to the public, I guess in an effort to extend empathy and communicate like real humans to us, the public. They have created some really nifty animate explainer videos where they explain their role, how regulated firms (like us!) are regulated, and how you as a ‘consumer’ are protected. Worth checking out.

#3 Rehash Your Protection Policies

This is another classic opportunity for firms to ‘churn’ the business that you have with them. Imagine you have a perfectly decent life cover, illness cover, income protection policy that you have. You have it in place 5 years or so. Your circumstances haven’t changed at all – but your ‘advisor’ approaches you with a ‘plan’ to rejig the whole lot with a new company.

A client that recently started working with us told me of such an experience she had last year. The ‘advisor’, whom the client hadn’t heard from for 2 years, called in with a very detailed, out of the blue proposal for her. The proposal involved re-writing several life cover and illness cover policies, and was being promoted on the basis that it might/maybe save the client a couple of thousand in 20 years time if x,y,z happened. There was no mention of the fact, which the client discovered herself subsequently through asking, that the ‘advisor’ stood to pocket €8,000 initial commission, if the client had have agreed to it. Which she didn’t, on the basis that there was no tangible benefit to her. In fact, it was the last straw in that relationship which encouraged her to look for another source of help in her financial planning.

#4 Saying Yes All The Time

Your financial advisor should not be someone whom you place orders with, and whom actions them on your behalf. In my view at least, your advisor should challenge you. They ought to encourage you to consider things you might previously have disregarded, or indeed never considered. If your advisor says ‘yes’ to everything you suggest or propose, then you ought to check what value they are bringing, beyond transacting your requests (which may be right, or which may be totally bonkers!). So, how should you ignore them? You should not mistake their ‘acquisence’ for advice and confirmation – seek a path that is perhaps a little less comfy but most likely more beneficial for you.

#5 Talking You Out Of Enjoying Your Money

Following on from last week’s piece, (Blog145 / Pod181) you don’t want to die with too much money. Yet, with some financial advisors, their intent is that you keep as much money as possible in your investments and pensions, spend nothing! If they try to talk you out of drawing-down cash and spending it or gifting it, it’s time to reassess the relationship.

If you tell them about any spare money you have sitting in deposit accounts, and their first and only suggestion is a shiny new investment plan they think you should do today, it’s time to reassess the relationship.

Of course, we should be prudent, prepare for our future selves, and be as tax efficient as we can be. So, for example, if they tell you that you ought to be making more contributions to your pension and being more tax efficient, and you have ample scope to do so – listen to them 100%.

But don’t listen to them if it comes at the total expense of your present self. As we spoke about last week, it is a balancing act. You want a financial advisor who can help you stay balanced, throughout accumulation and spending phase of your life.

4 Questions To Explore With Your Financial Advisor

Lets acknowledge that we all veer off-track at some point, in some way, shape or form. No matter who we are or what we do, there are times when we slip. So, if you suspect your advisor might have veered off-track, and maybe gave you a bum-steer, don’t throw them out! Do question though, the validity and motive for some of the above suggestions. 4 simple questions to explore in conversation:

  • Why do it?
  • How does it tangibly or otherwise stand to benefit me?
  • What is in it for you, Mr. or Mrs. Advisor?
  • What happens if we don’t do this?

If these can be answered and discussed with your Financial Advisor, to your satisfaction, then great. If not…….you know what to do! But at least have the conversation. Case in point, recently had a call from someone who felt they had been given a bum-steer from their advisor, and they wanted to explore working with me. My first port of call was that they have this conversation with their advisor, and if they still aren’t happy, that we can pick up the conversation. That was 3 or 4 weeks ago. I haven’t heard from them since. I hope they found a path that will be of benefit to them. Informed Decisions is not yet at the point where I have closed the door to new client relationships, but I do believe that for ‘consumers’ it is definitely worth trying to mend an existing and productive advisor relationship. Do that before jumping into starting a new one from scratch!

Money Where My Mouth Is!

Oh, if anyone that I work with professionally ever catches me falling into doing any of these (I have no intention of doing so, but if you do!) you have my absolute permission to immediately call me out. Arrange a lunch meeting somewhere really expensive (which we’d never normally do!) to discuss it in detail, and I’m paying!


Central Bank Explainer Videos

How Will You Spend Your Money – Podcast 181

Best Investments of 2020 – Blog 143

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