Your relationship with your financial advisor should be built on trust and mutual understanding. If you can’t trust your advisor, you shouldn’t put your hard-earned money in their hands, but it’s not always easy to tell when an advisor is trustworthy or not.
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These 10 statements can help you identify an advisor who is better to walk away from:
— “That performance is guaranteed.”
— “I guarantee this investment will make you money.”
— “Performance is the only thing that matters.”
— “This investment product is risk-free. You don’t have to worry, your money is safe.”
— “Don’t worry about the fees — you won’t even notice them.”
— “You don’t need to understand this. Just trust me.”
— “You don’t need to worry about health care costs.”
— “You should do this. It worked for my other clients.”
— “Don’t discuss this plan with other advisors.”
— “Act now or you’ll miss out.”
“That performance is guaranteed.”
Nothing in investing is guaranteed. Anytime a financial advisor says an investment’s performance is “guaranteed,” consider it a red flag.
“They also shouldn’t tell you or in some way imply that because a certain investment has had a performance track record over the last 10 years of (a given) percentage, that you too can expect the same performance,” says John Gillet, founder and CEO of Gillet Agency in Hollywood, Florida.
Instead, be relieved if you hear one of the most ubiquitous phrases in investing: “Past performance is not indicative of future results.”
“I guarantee this investment will make you money.”
Did you spot the “red flag” word in this one, too? This is another way advisors can mistake their role for one of a fortune teller.
“No advisor can promise returns,” says Stu Bradley, a wealth advisor at Hightower Wealth Advisors in St. Louis. “Guarantees suggest either a misunderstanding of risk or unethical sales tactics.”
If an advisor does use the “bad word” (guarantee), it should be along the lines of, “The only thing I can guarantee is that nothing is guaranteed.”
“Performance is the only thing that matters.”
Hand-in-hand with there being no guarantees in investing is the fact that relying solely on performance is akin to throwing a dozen coins in the air and claiming you know exactly which ones will land on heads.
“Study after study proves that no one has a crystal ball,” says Matthew Schwartz, a certified financial planner at Great Waters Financial. “If the advisor is touting performance, it is probably likely that you will eventually be disappointed.”
“This investment product is risk-free. You don’t have to worry, your money is safe.”
While returns cannot be guaranteed, risk involved in investing is a guarantee.
No investment is truly risk-free. Even your savings account has some risk — even if the biggest risk is that you won’t keep up with inflation — and your advisor should be aware of that. She should give you a detailed explanation of the potential risks of the investment before you invest. Anyone who promises security should not be trusted.
[READ: 5 Great Fixed-Income Funds to Buy for 2025]
“Don’t worry about the fees — you won’t even notice them.”
An advisor should never encourage you to ignore investment fees. Every fee you pay, even minor ones, erode your overall returns and should be weighed carefully before paying.
“Fee transparency is crucial,” Bradley says. “If an advisor downplays costs, it’s a signal they may not be putting your interests first.”
“You don’t need to understand this. Just trust me.”
Another red flag is an advisor who pressures you into buying a certain product or pursuing an investment strategy you aren’t comfortable with.
“While trust is important, a good advisor educates you,” Bradley says. “If they avoid explaining strategies or products, it could hide conflicts of interest.”
A good advisor will always take the time to ensure you fully understand how your money is being invested. If you’re confused, ask questions. If the advisor won’t answer them, walk away.
“You don’t need to worry about health care costs.”
Your advisor shouldn’t encourage you to ignore anything where your finances are concerned. But especially not the costs of health care, even if you have a huge nest egg or are decades from retiring.
“Home health care, assisted living and nursing home care are all expensive,” says Jerry Smith, president of JL Smith Associates in Canton, Ohio. “Ignoring the possible costs of these living situations later in life can lead to extreme hardship down the road.”
“You should do this. It worked for my other clients.”
Along with no guarantees in investing is the tenet that every person is unique, and thus every financial plan should be too.
“Just because a strategy worked for someone else doesn’t mean it’s right for you,” says Chris McMahon, president and CEO of Aquinas Wealth Advisors. “A good advisor personalizes their recommendations, not recycles them.”
The same holds true for estate plans, Smith says.
“Cookie-cutter estate plans can cause conflict and confusion,” he says. “Your family deserves a plan that takes their specific needs and relationships into account.”
“Don’t discuss this plan with other advisors.”
You may like to keep your private life private, but an advisor shouldn’t be telling you to keep secrets.
“Sometimes advisors will imply that their strategy is a ‘secret sauce’ and shouldn’t be shared,” McMahon says. “But in truth, most solid financial plans include widely accepted techniques and principles.”
An advisor should encourage scrutiny and collaboration with other professions, like attorneys or tax advisors, who can help ensure the plan is a good fit.
“If an advisor discourages collaboration or transparency, it’s best to walk away,” McMahon says.
“Act now or you’ll miss out.”
Another thing your advisor should never do is pressure you to act fast. “High-pressure tactics are a hallmark of product-pushers, not fiduciaries,” Bradley says.
Fiduciaries are financial advisors who are legally required to put your best interest first at all times. Advisors who are not fiduciaries may be paid through commissions on the products they sell, which could result in pressuring you to act in the advisor’s best interest, not your own.
While not all nonfiduciary advisors are product-pushers, anyone who tells you to act now should have their advice put under a high-powered microscope.
“Good advice should stand up to thoughtful consideration,” Bradley says. And good advisors should encourage this level of scrutiny.
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10 Things Your Financial Advisor Should Not Tell You originally appeared on usnews.com
Update 04/28/25: This story was previously published at an earlier date and has been updated with new information.
