Disclaimer: The following reflections are based on my contribution to an AOL Finance article published on April 21, 2025. For the complete feature, please visit the site here.
When the AOL team asked for my perspective on choosing a trustworthy financial advisor, I jumped at the chance.
As the founder of RGA Investment Advisors in New York, I’ve witnessed how consequential this decision is—especially during market turbulence.
Selecting someone to manage your financial future ranks among the most critical financial decisions you’ll ever make, and sadly, many investors miss crucial warning signs until significant damage has already occurred.
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The Danger of “Guaranteed” Returns
In my contribution to the article, I emphasized that:
“Any financial advisor who claims they can beat the market consistently or guarantees a specific return is either reckless or dishonest.”
I always urge potential clients to:
“Ask for audited performance reports or GIPS-compliant returns to evaluate claims transparently.”
This skepticism is well-founded—the article cited research showing that over 90% of actively managed funds underperform market benchmarks across typical 15-year periods.
Even the most talented investment managers rarely outperform indexes consistently over time.
Focus on risk-adjusted performance and long-term strategy, not fantastical promises.
Other Critical Warning Signs When Choosing a Financial Advisor
The article highlighted several other red flags that resonated with my experience:
Fiduciary Status: Ben Loughery of Lock Wealth Management correctly identified that advisors who aren’t fiduciaries “may not legally be required to act in the client’s best interest.” This creates a fundamental conflict that undermines trust.
Hidden Fees: Ryan McGonigal pointed out that unclear fee structures are significant red flags. What appears as small percentages can slash a $100,000 investment’s growth by nearly $95,000 over 20 years. One rule I share with clients: If you can’t explain exactly how you pay your advisor in a single sentence, dig deeper.
Product-First Approach: Avanti Shetye cautioned against advisors who “dive straight into their own products without hearing about your life goals.” I’ve always believed that understanding a client’s objectives must precede any recommendations.
Poor Communication: This becomes most apparent during market downturns—precisely when guidance is most needed. An advisor who disappears during volatility isn’t providing the comprehensive service you deserve.
Key Takeaways on Financial Advisors
When selecting a financial advisor, I recommend:
- Confirming fiduciary status in writing.
- Understanding all fees in actual dollar amounts, not just percentages.
- Ensuring recommendations align with your financial plan, not the advisor’s commission structures.
- Being wary of anyone promising guaranteed returns or claiming to have “secret formulas.”
- Insisting on proactive, plain-English communication—especially during market downturns.
A trustworthy financial advisor acknowledges market uncertainty while focusing on strategies tailored to your specific goals and risk tolerance.
They don’t hide behind jargon or make promises they can’t keep.
By watching for these warning signs, you significantly improve your chances of finding a financial partner who truly deserves your trust.
Disclaimer: The following reflections are based on my contribution to an AOL Finance article published on April 21, 2025. For the complete feature, please visit the site here.