6 Red Flags on Choosing Capital Advisors


Managing capital investment is a crucial part as far as your personal finances are concerned. Most people depend on their capital advisors to manage their financial affairs. Nevertheless, handing over that kind of a responsibility can be scary. Hence, it is very important that your advisor is competent and is working in your best interests. Some red flags that investors must watch for before trusting their hard earned money with someone are given below.

Lack of Credentials:

Everyone wants an advisor who is experienced and knowledgeable. One clear sign to know that this may not be the case, is the lack of credentials, especially credible ones such as a CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst). A designation means that the planner has been certified by a professional organization and therefore, has met the standards set by the body. The designation will also give you an idea about exactly what services he or she can provide you. For example; a Chartered Financial Analyst will be in a better position to advise you about overall capital and wealth management and so will a certified financial planner.

Lack of Time:

If your planner does not have enough time for at least one thorough meeting in a quarter year; there is a problem. Financial advice is all about what you want and what your goals are. A lot many things change over a period. Hence, your planner needs to be updated about the same to be able to work effectively towards your goals. If your planner has too little time to discuss your specific situation, there may be other concerns he or she might be compromising on.

Lack of Good Communication Skills:

An advisor, who is struggling hard to explain you the financial strategies or concepts, it could be because he has not understood them himself. You, as a person having an average knowledge of personal finance, may not be able to understand the concepts clearly. But, your planner must! So, if you suspect that your advisor is having problems in communicating, it is better you find someone who knows how to make you understand.


Consider a situation where you are about to undergo a surgery. Most people will feel nervous if the surgeon is not working in an organized manner and has trouble remembering where he kept that anesthetic. Similarly, capital advisors too are expected to be organized and if they are not, they should hire someone who can do the job for them. If your planner does not seem to be well organized or cannot afford to hire someone who is, then you have a potential problem in trusting your financial assets with this person. It may not affect you too much always; but sometimes a small mistake by your planner, due to his lack of organizing skills, can prove to be costly for you.

Promises Too Big To Be True:

Good capital advisors are able to gauge potential returns by judging the risks involved and do not guarantee anything. Any planner promising more than 8% returns on your investment portfolio with certainty is either underestimating the risks or overestimating his own skills. In addition, most high-reward strategies prove to be high-risk ones or do not provide the returns guaranteed initially. So, look out for a potential fraud in such promises and steer clear of such planners.

No Transparency:

Any financial consultant who pushes products that pay him a high commission is more of a salesperson. Ethically, capital advisors need to do what is best for the client. If he or she is always pushing you to invest your funds in products that benefit someone other than you, it is worth asking who he or she is really working for.


These above mentioned signs might not be deal breakers. However, if while reading through this checklist, you are nodding your head at more than one point, its high time that you shop around for a new consultant, whom you can trust for managing your capital assets and for planning and securing your future.

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