I hired a financial planner, but he’s already lost $70,000. What should I do?

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Is a significant loss a reason to abandon your financial planner?

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By ALISA WOLFSON

Question: I recently consolidated my superannuation and my 401(k) into one account, managed by a financial planner. But in seven months they seem to have lost $70,000 of my money. How do I know if they are making wise investments? It’s all new to me and I feel like I’m taking my first baby steps. Hoping not to fall, crash and burn. To help! (Looking for a financial advisor? You can use this tool to connect with a financial advisor who might meet your needs here.)

Answer: First, you’ll want to share your concerns with your new financial planner, and know this: “We’re in a bear market… What’s surprising is that your financial planner hasn’t contacted you to discuss the allocation. of your portfolio, of what they are. do to mitigate risk and how they fare against appropriate benchmarks such as the S&P 500 for equities and the Bloomberg Aggregate US Bond Index,” says Certified Financial Planner Anthony Ogorek of Ogorek Wealth Management. Plus, “they should have educated you about your investments and helped you plan your cash flow, plan your tax strategy, and understand the expiration date for each account,” says Certified Financial Planner Kaleb Paddock of Ten. Talents Financial Planning. If these things happen, it’s time for a conversation, at least.

While that’s not comforting, know that stock and bond markets have fallen in the first six months of 2022 to levels not seen in more than 40 years, according to Reuters. “The financial planner is probably not doing anything wrong with your investments, but they may need to do a better job of educating you and if you tell them about your concerns and your desire to know if you have sound investments, they can help educate you and hold your hand through the market downturn,” says Paddock.Adds Certified Financial Planner Matt Hylland at Arnold and Mote Wealth Management: term, but see very significant declines so far this year,” says Hylland.

Do you have a question about your current advisor or are you looking for a new one? Email [email protected]

Additionally, you should have completed a risk tolerance questionnaire and checked your planner’s reported risk tolerance against the portfolio allocation. “Brokerage statements must include stock symbols for positions held. You can tap tickers on websites like Marketwatch to find out more about the funds you hold,” says Ogorek.

During the process of meeting and hiring your financial advisor, Certified Financial Planner John Piershale of John Piershale Wealth Management says there should have been a presentation on investments. “This is where the advisor explains the proposed investment portfolio, its level of risk, and why it’s right for you,” says Piershale.

Depending on your specific asset allocation, you may see a slightly larger drop if you’ve expressed a willingness to take on more risk, or a smaller drop if you’re more conservatively invested, Hylland says. “A 60/40 portfolio, or a portfolio that is 60% stocks and 40% bonds, is a very common retirement portfolio and has been down about 15% so far this year,” says Hylland. .

If the $70,000 loss is about 15% of your previous account balance, you’re seeing declines that many other investors are currently experiencing in standard asset allocations, Hylland says. “If that $70,000 loss is a much higher loss, say 25% or more, and you haven’t expressed a willingness to take a lot of risk, it could be a sign that you need to talk to your financial planner about ongoing investments. used and why,” says Hylland.

Part of a financial planner’s job is to make sure their clients invest in investments that match their risk tolerance. “There’s never a right investment for everyone, so it’s important that you’re on the same page and that your accounts are managed in a way that suits your financial plan,” says Hylland. Ultimately, investigate before you invest and if all else fails, take your portfolio to another advisor for a second opinion.

Do you have a question about your current advisor or are you looking for a new one? Email [email protected]

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