Hard Lessons from a Lost Account

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Dan Richards

A list of Dan Richards’ previous articles appears at the end of this article.

A video of this article is available here.

Every couple of weeks I take an evening or a weekend morning to talk to investors – discussing their mood and chatting about what they’re thinking and doing.

A couple of weeks ago I talked to an investor who had recently switched advisors – and who provided an example of the stress that investors experience when they‘re not sure whether their advisor is really on top of their financial affairs.

“I’d been working with this advisor for a few years,” he said, “and I liked him well enough. He’s actually a really nice guy.

But late last year I realized that I was losing sleep because I wasn’t sure whether he was really on top of my situation.”

This investor went on to say that as a result, he was approached by a different advisor who a buddy of his suggested contact this investor. After a couple of meetings, he moved his account.

I asked this investor what led to the decision to change advisors.

Two things really,” he answered.

“First, my advisor had put together a financial plan about three years ago.

In light of everything that’s happened, about a year ago I asked him whether the plan needed to be updated. His answer was that the plan had a long-term focus and that what we’d been through was just a blip and that I didn’t need to worry.

Given that I kept reading about how the financial system was melting down, I didn’t entirely buy that – and got more and more concerned that my advisor wasn’t really taking my account seriously.”

Then he went on.

“The other thing that concerned me was that, aside from getting a call from his assistant to book a meeting once a year, I had to take all the initiative to stay in touch.

Whenever I called him, he always got back to me right away – he was really good at that.

But I only heard from him when I called. I was just concerned that I wasn’t important enough for my advisor to really care about – and that my half million dollars was secondary to his other bigger clients.”

Like many people who switch, this investor didn’t relish the prospect of breaking the news  – and the new advisor told him he’d get in touch with his previous advisor’s office and take care of all the paperwork entailed to switch his account over.

Inevitably, the investor got an immediate call from his old advisor.

“I was really surprised to get a request to transfer your account,” the conversation began.

“I know that the markets have been tough but I thought that we had talked about how your account has really bounced back and in fact done well under the circumstances. Based on our last conversation, I thought you were actually reasonably happy.”