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9 Signs Your Financial Advisor May Be Mismanaging Your Money
At Israels & Neuman, PLC, we help investors who have been harmed by negligent or dishonest financial advisors. If something feels off with your investments, here are nine red flags to watch for.
- 1. Unexplained Losses That Don’t Match the Market
If your portfolio is consistently underperforming — especially when the market is doing well — your advisor may be taking inappropriate risks or failing to follow your investment objectives.
- 2. Excessive Trading (Churning)
Are there lots of trades in your account that you didn’t authorize or don’t understand? Some advisors generate high commissions for themselves by overtrading, which can eat away at your returns.
- 3. Lack of Communication
A good advisor should be responsive, explain changes, and answer your questions clearly. If yours is hard to reach or avoids giving straight answers, it may be time to take a closer look.
- 4. Failure to Receive Consistent Account Statements
Many fraud victims receive account statements only sporadically — or not at all. If you aren’t getting regular, detailed statements from a legitimate financial institution, that’s a major red flag.
- 5. High Fees You Weren’t Told About
Hidden fees and commissions can signal that your advisor is putting their profits ahead of your best interests. Always ask for a clear breakdown of costs.
- 6. Overconcentration in a Single Stock or Sector
Diversification is key to managing risk. If your portfolio is heavily invested in one company, product, or industry, that’s a potential red flag.
- 7. Pushing Complex or Unfamiliar Investments
Were you sold a product you don’t fully understand, like a REIT, structured note, or annuity? Advisors sometimes pitch these high-commission products without explaining the risks.
- 8. Unclear or Vague Explanations of Where Your Money Is Invested
If your advisor cannot clearly explain what your money is invested in and how it works, that’s a serious concern. Transparency is key — you have the right to know how your funds are being used.
- 9. You Feel Something Just Isn’t Right
Trust your instincts. If you’re uneasy, it’s worth reviewing your account with an experienced investment fraud attorney who can help spot potential misconduct.