5 Financial Advisor Red Flags (From a Former Advisor)

I spent years working inside the financial advice industry. Here are the five red flags I’d tell my own family to watch for before hiring (or keeping) a financial advisor.

Fair warning: red flag number one describes the majority of the industry. It’s the AUM fee model, where you pay a percentage of your assets every year, forever, meaning the client with $2 million pays twice as much as the client with $1 million for the identical service. And that’s just the beginning.

In this video:

▸ Why “fee-only” is NOT the same as “flat fee,” and the clever wordplay the industry hopes you won’t notice

▸ The one question to ask every advisor you interview (“What would you do with $100,000 of my money?”) and how to grade their answer

▸ What a fiduciary actually is, what Regulation Best Interest actually isn’t, and why Bernie Madoff proves a title alone protects nothing

▸ The follow-up question that would have stopped Madoff: “Where is my money actually held?”

▸ Churning and cash drag: two things to watch even after you’ve hired someone

▸ How to leave an advisor: the respectful way, and the no-contact ACAT transfer way (my fellow introverts, this one’s for you)

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DISCLAIMER: I’m not a financial advisor, attorney, or licensed specialist of any kind. I’m an educator sharing publicly available information. Nothing in this video is individualized financial, legal, or medical advice. Always consult an expert and not some ding-dong walking through the woods of Vermont.

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