I don’t actively follow golf, but I’m intensely interested in how humans act under pressure.
Let’s apply some pressure: suppose for a moment that you reach retirement age and find out that you were inadequately prepared. How would you act?
The press was a little ugly against popular golfer Bubba Watson a couple years ago in a big golf tournament as he missed stroke after stroke, moving from the front of the field at the Travelers Championship toward the back in a hurry. Nobody criticized his poor shots. Golf history is littered with missed opportunities and epic collapses. Watson’s errant shots weren’t close to newsworthy.
What they were harsh about? His treatment of his caddy.
Check out this video:
Back to my original question. Your retirement plan stinks, and is melting around you. Do you blame your advisors?
In Some Respects, You Should
I’ve met plenty of advisors who were responsible for their client’s failures, and even more who were responsible for their client’s mediocrity. Using fee-loaded funds and high price-tag annuities, advisors are often a leech: see how long you can hang on to the asset base without being noticed and fired.
But when is the right time to acknowledge your advisor’s mistakes? In Watson’s case, he’d had practice and then four rounds with this caddie. Does it make sense to blow up on national television that late in the game?
You Own Your Success, Don’t You?
As a former advisor, I understand needing competent help and I understand the need to implicitly trust your advisors. Your advisor needs to be a trustworthy sherpa who can guide you up the mountain of retirement. If she’s particularly good, she can teach you secret routes that few travel, helping you reach the summit either faster or with less pain along the way. It’s up to you to find and hire someone, then to determine whether your advisor is up to the challenge.
If your advisor isn’t the right one, it’s also up to you to have the balls to fire her and look for another.
How Do You Know If It’s Time To Fire Your Advisor?
First of all, don’t trust your gut. If business owners on popular shows like Kitchen Nightmares or Tabitha’s Salon Takeover trusted their gut, they’d fire Gordon or Tabitha immediately…and they would have never turned around their business. Often a good advisor is going to tell you the blunt, brutal truth. I want that kind of help in my life, not a “yes” man.
Spot check the plan.
I tire quickly of stories of people working with advisors who only exist to sell investments. Aren’t we old enough to buy our own investments now? Aren’t we at the point in history where having a “middle man” between you and your money is like an antique?
Your advisor exists to plot the course. Sure, you can do this legwork yourself, but like a skilled mapmaker, she can do it in 1/10th of the time and it’ll be accurate. It’s your job to lay out the goals. Once you have the plan, it’s your job to spot check it. Are the milestones relevant? Is this a path you can follow?
Here’s a frustrating point: because I was an advisor on television, potential clients rarely checked my credentials (by rarely, I mean that I can remember exactly two people looking up my BrokerCheck record or asking about my academic background).
Ask to interview successful clients.
Often bad advisors I knew would cite Hippa requirements and say that they couldn’t give recommendations. Are you kidding me? If the client, in writing, tells the advisor that it’s okay to share their name, the advisor can then pass on referrals.
I often laughed at this one, though. If you asked me if you could talk to my clients, do you think I was going to introduce you to the ones that I had a bad relationship with? That’s why this is point #3 on this list. and not #1.
Ask about community involvement.
This doesn’t make an advisor good, but it does show that they’re willing to be out in public as an advisor. Often if an advisor is tied into the community, they’re less likely to be hiding shady secrets.
Ask about investment philosophy and fees.
If an advisor works in a manner different than you want to pay them, they might not be a great fit.
Above all, if you reach retirement, like Bubba Watson reached the back nine of the last day of the tournament this weekend, don’t start yelling at your help. Blaming everyone around you doesn’t make the situation better. And, a note to Mr Watson: no matter how much that caddie messed up, you were still the one holding the golf club. Remember that, Stackers; if your help messes up, their dreams aren’t down the drain: only yours.
You’re silly! I agree that it’s everyone’s responsibility to know what’s going on… you can’t leave all of your trust in someone else’s hands!
Edward - Entry Level Dilemma
When I hear “retirement plan”, I tend to think of a 401(k) in which case you really don’t have any control over much more than how much money you put in.
You’re talking gov’t definition…I’m talking about your overall plan for retirement. Even so, with a 401k you have many options: how much you invest, where you invest, when you move funds around, loans/in-service withdrawals….
Daisy @ Prairie Eco Thrifter
Many don’t have advisors and just invest the money themselves in tax sheltered accounts. I think mainly, the individual is to blame if they are left high and dry with no retirement; it’s all about how much you put aside. If you invest it in a medium risk account it’s unlikely you’ll go broke.
True, but it’s also unlikely you’ll reach your goal if you arbitrarily invest money in a medium risk account. What if you’re saving too much? Too little? I want the Goldilocks retirement….milestones, an end goal, and just right.
Matt @ momanddadmoney
Not a good moment for Bubba. I definitely think there’s a shared responsibility involved. As the consumer, you have the responsibility to pick the advisor and monitor his or her work. If you’re not doing your job there, then what right do you have to criticize the work that was done? But the advisor may definitely share in the blame as well. As you mention, there are many out there whose sole goal is to sell a product, and that will rarely be in the best interest of the client.
Clearly not Bubba’s best moment. When you have a problem with someone at the very least say it behind closed doors….not on national tv.
I am a HUGE fan of personal responsibility. So many people are victims of their own need for immediate gratification that they never read anything they sign.
These are the ones who also want to had off the difficult stuff of ensuring a secure retirement to some “expert” at the cost of fees they don’t even know they’re paying…AND, they’re the ones screaming foul play when things go bad.
Ree ~ I blog at EscapingDodge.com
DC @ Young Adult Money
Good points, Joe. I think you are right that the advisor would own some of the responsibility, but it’s also each individual’s responsibility to hire the right person. If I had hired roto rooter to fix my sewer pipe I would be on the hook for $7k. Because I did my homework and hired someone else, I ended up paying $0 and being compensated by the city for all plumbing bills I had accumulated. Hiring an advisor should be no different.
Mrs PoP @ PlantingOurPennies
I feel like this post is the big “WHY” my MIL needs to fire a couple of financial advisors that aren’t necessarily a good fit, but not the “HOW”. She’s really having trouble getting past that and we just don’t know what to tell her.
How to fire the advisors? That part is easy. Finding the right one is the difficulty. Something tells me I’ll be writing about that early next week….. 😉
Common Cents Wealth
This is a great point. It may be their job to manage your money, but you still need to keep up with what’s going on. I will probably always manage my own investments just because I want to make sure that we’re on track. This will ensure that there are no surprises when my wife and I do decide to retire. For the record, Bubba Watson seems like a good guy and probably had a minor lapse in judgement by blaming his caddy.
I’m sure he’s a great guy. What’s sad is what events like this do to a reputation. You can work years to build a rep as a “good guy” and one bad day can make it all go away.
Good point about the golf club (btw, I will play golf when I retire in five years time and my handicap won’t be just that I am a middle aged woman :)). I was thinking from the begining of the article that we have to take ownership and responsibility for our decisions; advisers do exactly that – they offer advice and we pay them for that. But the decisions are ours!
A huge reason (other than my debt) why saving and investing seems so impossibly hard for me right now is because I haven’t educated myself on it all enough yet and until I understand everything I’m not handing my cash over to someone else!
Lindsey @ Cents & Sensibility
I think it is a share responsibility as well (like Matt). I would like to find a good financial adviser so we can have a some good feedback on how much to plan for retirement-wise and how to build a proper investment portfolio. For us, it’s not really about having some one do it, or even plan it – it’s just a good opinion that we incorporate into our own decision-making processes (part of our education, if you will).
We are all responsible for our own retirement. If you don’t do your part it’s your fault, not the government, your boss, your crappy job, your ungrateful son, etc. Buck stops here!
Kim, I’d vote for you if you’d run for office. That attitude would be refreshing.