There are plenty of trustworthy financial advisors out there. There are also plenty of sketchbags in the industry, and knowing how to distinguish between one and the other can save you a lot of headache and thousands of dollars over the long run. Here are a few telltale signs that your advisor might not have your best interests at heart.

Your advisor refuses to talk about how they get paid.

You didn’t think that they were helping you out of the goodness of their heart, did you? If your advisor tells you that you don’t have to pay them a dime, ask them who is compensating them for their time, and how those people are making the money to afford that. Ultimately, it all comes back to you as the client, even if you aren’t paying them directly.

Now let me be clear: there’s nothing inherently wrong with getting paid by the companies that make the mutual funds… well, except for the massive conflict of interest it creates. While some financial advisors are able to make the right choices for their clients despite this conflict, many find the promise of a bigger paycheque too irresistible to pass up.

If your advisor won’t give you a straight answer about how they get paid, it’s a strong suggestion that they fall into that latter category.

They make you feel stupid when you ask questions about your investments.

Many folks in the industry like to use fancy words to make themselves sound smart… and they often are. But there’s another, more sinister reason they do this: to make you feel so far beneath them that you don’t challenge anything they tell you. If you do challenge them, they will often gaslight you and make you feel stupid for even asking the question.

If this has happened to you, run like hell.

Any financial advisor worth their salt will be happy to answer all of your questions in plain, easy-to-understand language. It’s your money and your future, after all; you have every right to make sure you feel comfortable with the plan your advisor is suggesting.

If your advisor makes you feel small for asking questions, kick them to the curb and find someone who will, because you’ll have no idea whether you’re being taken advantage of or not (just the way they want it).

Your advisor tries to sell you a product without explaining why it’s a fit.

This happens very often with life insurance. The person – who is often a friend or family member – proposes life insurance without any foresight or explanation as to why you might need life insurance, right the right amount should be, or what type of insurance is best for you (spoiler – it’s term insurance for all but maybe 5% of the population).

Just the other day a close friend called me asking about life insurance. When I poked a little deeper, he mentioned that an old acquaintance of his had called him and told him he needed life insurance. When I asked what her rationale was, of course she had none. The guy has no dependents, doesn’t own a home, and has very little debt. Yet he was being sold expensive Whole Life insurance that would cost him $290 a month. Are you kidding me?!?

The next time someone tells you that you need life insurance and offers to sell it to you, say this: hey, that’s great, thanks for looking out for me. Can you walk me through the rationale for why I need insurance, how much I should take out, and the math on how you got there?

Then cover your mouth, or you’ll wind up eating their dust as they turn tail and peel out in their Mercedez that they paid for by ripping off other people who don’t know any better.

Your advisor doesn’t take the time to understand your goals.

Similarly to the above, if you advisor makes investment recommendations without first taking the time to understand your unique financial situation, your investing philosophy (you have one, even if you don’t know it), and your goals for why you’re looking to invest, how can they possibly put together a game plan that’s tailored to your needs?

This up-front research takes time, and it’s work. I get why many advisors don’t want to do it. But the very best ones, the ones that get all of the referrals down the road, are the ones who put in the time and deliver a plan that makes you feel like you’re the only client they have.

Wrapping it Up

So there you have it, four warning signs that your advisor is in it for them, and not for you. Like I said before: while there are many crappy financial advisors out there, there are also a lot of great ones. If you’ve experienced any of the things I mentioned in today’s post, take the time to ask around and find a better advisor… your future self will thank you for it.