When should you switch your financial advisor? 5 warning signs investors should watch for

Choosing a financial advisor is only the first step in managing your money. As an investor’s income, financial goals and responsibilities change, the advice they receive must evolve too. But if conversations increasingly revolve around buying new financial products rather than reviewing existing investments, it may be time to reassess the relationship.

A financial advisor should help investors make informed decisions based on their financial goals, risk appetite and investment horizon. The relationship should also involve regular portfolio reviews, clear explanations of recommendations and transparency about costs. When these elements are consistently missing, investors may need to consider whether their advisor is still serving their interests.

Sanjiv Bajaj, Joint Chairman and Managing Director of Bajaj Capital Ltd, identifies five warning signs investors should watch for: conversations dominated by new products, recommendations without adequate explanations, irregular portfolio reviews, unclear costs and poor communication.

“A good advisor relationship should get more valuable with time. The longer an advisor knows you, the more relevant and meaningful your conversations should become,” Bajaj said.

1. Your advisor focuses more on products than your goals

An advisor repeatedly recommending new mutual fund schemes, insurance policies or other financial products without first reviewing the existing portfolio should prompt investors to ask questions.

New investments may sometimes be appropriate, but the recommendation should be based on the investor’s overall financial position, rather than the availability of a new product.

“Before suggesting something new, a good advisor should first understand what you already own, what each investment is meant to do for you, and whether anything needs to change,” Bajaj said.

Investors should ask how a proposed investment fits into their existing portfolio, what purpose it serves and whether it addresses a specific financial need. They should also understand the associated costs and risks before committing money.

2. Recommendations come without clear explanations