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I am extremely unhappy with my current IRA manager. I am considering a move to another financial planner.

How can I objectively measure a financial expert?

What subjective things should I consider?

Given my reasons for being unhappy with my current planner, how can I improve my own interactions to have a better experience with the next one?

I am currently with a very large bank and have had several people working with me over the last 9 years. Small mistakes have been made in the past with the same organization, I feel this may be a systemic problem with that firm rather than any one person.

Why I am unhappy: Met with my IRA guy back in May to open an IRA for my wife, review my IRA, and establish an automatic contribution. I found out in August that the automatic contribution was only set up for my wife's IRA and not for mine. When ironing that out he "fixed it" and withdrew against the wrong account. Now upon reviewing the August statements, the lump sum which was contributed in May is sitting in what is essentially a savings account and has not bought shares of the funds we selected. The straw that broke the camels back is that I left a phone message Monday, spoke with his assistant on Wednesday, and I still do not have any input on my issues. Some of this is partially my fault for only skimming statements, however I'm not happy with the help I'm getting.

  • +1 you gave great details. My only warning - Companies are not the same as individual workers. I suppose some will average far higher than others, but there will always be a few employees who will disappoint. As I read your question, you are not demanding ongoing attention, just getting a simple process done right. Attention for the small investor is costly, but a signup and implementing what you ask for is the minimum to maintain a flow of new happy clients. – JTP - Apologise to Monica Sep 13 '12 at 14:23
  • That is correct. My wife and I are 29. Our investments are very long term. We need an annual review with a pro and we skim our statements every month. I want to be a low-impact investor. Since this mess came up I am now reading my statements every month. I'm suffering from a lack of trust, if they cock up my investments when we are dealing with tens-of-thousands what happens when I start looking at retirement with hundreds-of-thousands and mistakes are made? – Freiheit Sep 13 '12 at 14:43
  • On the bright side, you know about the problem at 29, not 59... – corsiKa Sep 13 '12 at 14:59
  • The reason I've not posted an answer - I have a broker I am happy with, but you may get a local contact that lets you down. The best answer here will I identify a company who has a higher satisfaction rate, I imagine. You are clearly on the right track, as corsiKa comments. – JTP - Apologise to Monica Sep 13 '12 at 16:38
  • @JoeTaxpayer, " The best answer here will I identify a company who has a higher satisfaction rate". How do I go about doing that? – Freiheit Sep 13 '12 at 19:42
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This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire.

You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a "portfolio analysis" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than "staid" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc.

So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.

  • My IRAs are in mutual funds and doing quite well. Thats why I've stuck it out with this company (a bank) for so long. Their advice has proven sound. This is an interesting and valid answer to my question. I will consider self-directed options. – Freiheit Sep 13 '12 at 17:23
  • I believe this is very good advice. Your advisor has to beat the market to the point where your returns cover his fees in full and you still come out ahead of the S&P. That is a difficult proposition, considering the majority of managed large cap funds do not beat the S&P as is. – Jeremy Sep 21 '12 at 1:59
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I've not gotten an answer so far. Since I've started my search for a new financial planner here are the criteria I am using:

  • Recommended by a trusted friend - I have several friends who know, even one who works for, financial planners. The recommendations I trust come from friends in similar career and financial circumstances.
  • Recommended by a trusted advisor - The Dave Ramsey ELP listing is not as trusted as a friend, but the Ramsey empire has steered me straight in the past.
  • Responsiveness - After the initial contact, how prompt is the potential hire to respond to my inquiry.
  • Scheduling - Both the financial planner and I work regular jobs. How open is his schedule to be able to meet with me? How well does he respond to a request for a phone call instead of an in person meeting or vice versa.
  • Criticism of existing plan - What can the new guy point out that is bad AND good about my current portfolio? About my investing strategy and goals?

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