‘She made about $15K last year off my money.’ My financial adviser is making money off the $1 million I invested with her — even though I’m losing money. What’s my move?

We started with $1 million dollars, and I expected to see it grow quite a bit, but instead I’ve been losing money over the past few years.


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Question: I am a single mom with three young children. I want to help them with their first cars and paying for college. I’d also like to leave them something when I pass away. I have a financial advisor managing my finances, and we created projections using my debt, mortgage, and other financial factors. From that, it looks like, if I continue to work and contribute to my 401(k), I can help my kids, retire at 65 and outlive my money. But those projections were made before the market started tanking.

We started with $1 million dollars, and I expected to see it grow quite a bit, but instead I’ve been losing money over the past few years. I understand the market is not doing well, but I wasn’t seeing the kind of growth I expected to see even before the market started tanking. I am not sure my financial advisor is doing much for me. That said, I also don’t know what she is supposed to do. (Looking for a new financial adviser? This tool can match you to an advisor who may meet your needs.)

The advisor is open to meet quarterly but I don’t see the value in meeting as I feel like words are thrown at me and I am not sure what to ask. I need to know how the money is being managed, and I feel like the accounts were set up and nothing is done with them, yet she made about $15,000 last year off my money. What are the right questions to ask? And the fee is confusing to me, it’s not a 1% flat rate. I believe on one of the buckets, it’s 1.5%, so I’m paying a lot but not sure what I am getting in return. How do I know if I’m getting my money’s worth?

Have an issue with your financial adviser or looking for a new one? Email [email protected].

Answer:  There’s a lot to unpack here, but it sounds like your adviser is not doing a good enough job communicating with you about what she’s doing with your money, and what you’re paying her. Let’s start with what you’re paying her. 

Are the fees your adviser is charging you fair?

As it pertains to the fee, 1.5% is on the higher end of the fee scale. “Most firms are closer to the 1% range, or in some cases a little less,” says certified financial planner Joe Favorito at Landmark Wealth Management. (Looking for a new financial adviser? This tool can match you to an advisor who may meet your needs.)

This article can help you figure out what average fees are for financial advisers, and note that fees are negotiable.

Note this, too: Your adviser may also be earning money in another way (besides a percentage of assets under management) from you. Indeed, if the adviser is not a fee-only adviser, and instead is fee-based and earning her fee from selling you something, “she may also be compensated as part of the investment product sales,” says says Favorito. That, he adds, “can create a conflict of interest and potentially drive up the internal expenses that you don’t see on the investments.” Essentially, she may not necessarily have your best interests in mind if she knows she’ll earn a hefty commission by recommending a product to you, even if it doesn’t make the most sense for your situation. 

While it may sound surprising or unfair, it’s typical for advisers to still earn their fee even if your portfolio is down. If you’re working with an assets under management (AUM) model, they may be making less than they would if your portfolio were increasing, and if you’re working under a flat-fee or hourly basis, the amount you’ve agreed upon still stands regardless of any market volatility.

Ideally, you probably want a fee-only certified financial planner — they’ve completed coursework, have experience and are held to a strict code of ethics — and you can find one through the National Association of Personal Financial Advisors’ (NAPFA) “find an adviser” tool.  Know too that you don’t have to opt for an assets-under-management situation; some advisers charge on a per-project or hourly basis and that may be a better option for you.  

Looking for a new financial adviser? This tool can match you to an advisor who may meet your needs.

Do you need a new adviser? 

It’s a good sign that your adviser is working on budgeting, investing and future planning with you, and that she is open to meeting quarterly.  It’s helpful to revisit all of that at least annually to make sure you’re on a trajectory that feels promising for you.

“I like to equate financial planning to sailing — if you plot a course and then fall asleep in the boat without making any adjustments, you may wind up on a different continent. Minor adjustments along the way can keep you on the proper path,” says Favorito. 

But she still seems to miss the mark in a few ways. One thing you need to hone in on is trust. “It’s normal to be anxious about your money given the turbulent economy, but if you don’t have confidence that you’re on the same page as your adviser, you should consider having a conversation with her right away,” says Andy Rosen, investing spokesperson at NerdWallet. 

It also sounds like you’re wondering whether your plans need to be adjusted to account for the bear market. “Tell her your concerns. You might ask her to describe what she’s doing in plainer language and you can also request a clearer breakdown of her fee structure,” says Rosen.

In fact, certified financial planner James Hemphill at TGS Financial suggests you ask for written answers to these three questions: 1) Please describe the investment philosophy and strategy for my overall portfolio, and how the strategy is different for my two different buckets. 2) Identify the specific vehicles used for all of my portfolio dollars. 3) Provide the up-front sales charges I paid to buy each of these vehicles, the back-end surrender charges I’d pay if I exited the vehicles now, the expenses intrinsic to each vehicle and the fees the adviser charges to supervise each vehicle. 

You should also know how your portfolio is being benchmarked. “If half of your money was invested in the bond market, you wouldn’t want to compare the entire portfolio to the S&P 500 stock index, which is 100% in the stock market. “You’d want to have a relevant comparative benchmark for each area of the financial markets you’re invested in so you can see if your portfolio is performing no worse than markets as a whole,” says Favorito.

Ultimately, it’s important not to get too caught up in the market’s short-term results. “Investing is always about the longer term and it makes more sense to measure the returns over the course of a full market cycle which is typically 7 to 10 years,” says Favorito.

 If you’re still feeling uneasy after addressing some of these issues, it may be time to find a new financial adviser. Some good places to start are the National Association of Personal Financial Advisors or XY Planning Network, both of which offer databases of fee-only, fiduciary planners.

“If you feel uncomfortable at all with the advice or communication you’re getting, then you should look for another adviser. It doesn’t have to be complicated or for an in-depth reason. The adviser is not explaining things to you and you feel lost and have a lack of confidence,” says Georgia Bruggerman, certified financial planner at Meridian Financial Advisors. (Looking for a new financial adviser? This tool can match you to an advisor who may meet your needs.)

To ensure you land an adviser you work well with, Bruggerman says you should ask prospective advisers to explain their investment philosophy and approach. “If they explain it in a way you don’t understand or with jargon, you should keep looking. The adviser should be able to explain the specific investments the client owns and why they were chosen,” says Bruggerman. Here are the 15 questions to ask any adviser you might want to hire.

Have an issue with your financial adviser or looking for a new one? Email [email protected].

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