Red Flags It’s Time to Dump Your Financial Advisor

Jan 1

This article is not for the top 1%—the ultra-wealthy who hire financial advisors because they’re earning so much money they truly don’t have time to manage it themselves.

This is for the working person—especially women—who were never taught investing and ended up with a financial advisor because a friend, colleague, or employer recommended one.

I run one-on-one retirement optimization workshops with women every week. These are women who have been saving diligently for decades, trusting their money to a “financial advisor.” What I see breaks my heart. The investments they’ve been sold are often expensive, inappropriate, and designed to enrich the advisor—not the client.

A woman recently told me her cousin just bought a luxury vacation home from the money she made selling financial products to teachers.

That’s why I’m writing this.

🚩 Red Flag #1: Your Advisor Works for an Insurance Company

If your “financial advisor” works for—or is affiliated with—companies like AXA, Equitable, Brighthouse (formerly MetLife), National Life, Lincoln Investment, Security Benefit, any insurance company, or any vendor on the red list at 403bwise, this is a massive red flag.

These are insurance salespeople masquerading as financial advisors.

They are paid huge commissions to sell insurance products that are dressed up to look like investments. Any product that is part insurance and part investment is almost never a good deal for you—and almost always a great deal for them.

By definition, they are motivated to sell the highest-fee products.

If your advisor works for any of these companies, I would stop reading right now and switch to a fee-only fiduciary advisor.

🚩 Red Flag #2: They Recommend Whole Life or Universal Life Instead of Term Life

There is no legitimate financial reason for most people to buy whole life, universal life, indexed universal life, or variable life insurance instead of term life insurance.

None.

These products are recommended for one reason only: they pay enormous commissions to the salesperson.

If your advisor is pushing life insurance as an “investment,” they are putting their paycheck ahead of your future.

🚩 Red Flag #3: “Guaranteed Returns” or “No Market Losses”

If your advisor promises guaranteed returns or says your money will never lose value in the stock market—and it’s not a CD or short-term bond—you have almost certainly bought an annuity.

They will never call it an annuity.

You won’t see the word when you log into your account. What you will notice is that your money isn’t growing the way it should—especially when the market has been on fire.

I often have to play detective to identify annuities. Common giveaways:

No 5-letter ticker symbol (like VFIAX) next to the fund
The word “contract” anywhere
Returns that lag badly while the market is booming

People regularly tell me, “I don’t have an annuity—I just have a guaranteed return for seven years.”

If it walks like a duck and quacks like a duck, it’s a duck.

One school district I helped had their entire 403(b) with an Annuity company. On the surface, it looked like they owned mutual funds. Only after calling did we learn they were actually variable annuities—some of the worst products available.

🚩 Red Flag #4: You Don’t Pay Your Advisor Directly

Advisors make money one of three ways:

Fee-only (flat fee or percentage of assets)- often called Assets Under Management(AUM)
Fee-based (fees plus commissions)
“Free” (the most expensive of all)

If your advisor is “free,” the fees are buried inside the products. Every dollar you invest is quietly skimmed to pay commissions—again and again.

A so-called free advisor is often far more expensive than paying a transparent, fee-only fiduciary.

Your advisor should be willing to sign a fiduciary pledge stating they will act in your best interest. If they won’t sign it, that should deeply concern you.

🚩 Red Flag #5: They Only Manage Investments—Nothing Else

If all your advisor does is pick investments, you’re overpaying.

For the fees people pay—often around 1% of assets—you should be getting:

A real financial plan with year-by-year projections and multiple retirement scenarios
Tax efficient retirement income planning (where your money comes from in retirement)
Tax planning strategy, including reducing Medicare tax (IRMAA), and Roth conversion planning
Health insurance and Medicare planning
Ongoing updates as your life and goals change

If you only want investment management, a low-cost index target-date fund can do that for pennies.

A true financial planner looks at your entire financial life, not just your portfolio.

🚩 Red Flag #6: They Manage Your 529 College Plan

This one makes me furious.

If your advisor is managing a 529 college plan for a child or grandchild, they are often charging 1% or more for doing absolutely nothing—for the exact same fund you could buy directly from your state or from Fidelity.

What makes this worse? The fees are hidden inside the fund.
You never write a check. You never see an invoice. The money is quietly skimmed off every year, whether the market goes up or down.

Example:

Connecticut’s CHET 2036 fund purchased directly has an expense ratio of 0.12%
The advisor-sold version of that same fund has an expense ratio of 1.8%

Same fund. Same investments.

Over 10 years, the average return of this target date fund is 5.73%—but more than 31% of the gains are lost to commissions in the advisor version, compared to about 2% when purchased directly.

Here’s what that actually means in real dollars:

Invest $300 a month for 18 years in the advisor version → $105,852
Invest the same $300 a month in the same fund purchased directly → $125,326

That’s $19,474 gone—not because of market risk, bad timing, or poor investing decisions, but because of hidden fees embedded in the fund.

Here’s how easy it is to setup a 529 College plan yourself.