The Limitations of the Advisor-Client Relationship

My friend Tom Brakke‘s most recent subscriber letter contains a very important reminder about what the financial advisor-client relationship should and should not encompass.

Is your financial guy framing himself as a political expert or giving you advice based on his advocacy of a particular political position?  You may want to read this…

The root of much of this is a relationship that is too often built on misguided expectations. Many clients think of their advisors as being able to provide answers to an incredible array of questions, most of which have no real answer at all. Unfortunately, in many cases they do so because their advisors have positioned themselves and their firms as experts that can do just that, when they cannot.

If you think of your advisor as a pundit, you are setting him or her up for failure, and yourself too. If they position themselves as such of their own accord, don’t be enamored by it, be concerned about it.

Yes, advisors need to make recommendations, but there is a margin for error that needs to be considered at all times. It’s the range of possible outcomes that are important, not whether a recommendation is the advisor’s “best idea” or a “high conviction” pick. Often, those are the ones that go awry.

So, what should those discussions between you and your advisor be about?

For Tom’s answer to that question, visit TJB Advisors here.