A good financial planner can guide you toward useful products, boost the returns on your investments and help you design a
sensible approach to retirement
. A bad financial planner, on the other hand, may fail spectacularly on each of those counts -- and others.
How can you tell if you're stuck with an incompetent or unscrupulous financial planner? Here are six red flags you may encounter.
1. A turbulent backstory
If your prospective adviser has switched jobs frequently, it could mean trouble, says Jayne Di Vincenzo, CEP, president of Lions Bridge Financial in Newport News, Va.
"I've had advisers apply to work with me who have changed firms every two years," Di Vincenzo says.
When looking at an advisement firm, it may be wise to look into the turnover among the firm's advisers and staff, says Robert Schmansky, CFP, founder of Clear Financial Advisors in Bloomfield Hills, Mich.
"If there has been a lot of turnover among the professional staff, among the advisers specializing in certain areas, that could be a sign that those people aren't comfortable with the way things are being run," Schmansky says.
2. A one-size-fits-all philosophy
If the only tool you have is a hammer, everything looks like a nail. But if you encounter a financial planner who fails to look deeply into your individual situation, you may be better off looking elsewhere for advice. Di Vincenzo says these advisers are frequently more interested in selling products than they are in helping clients.
"Whatever your financial needs are, there's only one answer such as an
, whole life insurance, one hot stock, etc.," Di Vincenzo says, describing how some planners promote singular approaches. "Or everything you need is one product or one fund family. They're a product pusher, not a financial planner."
3. Constantly shifting tactics
Be wary if every time you meet with your adviser, he or she is recommending a change in investment strategy or hot new product, Schmansky says.