Reading a Financial Plan From My Advisor Shouldn't Require a Degree in Economics!

Have you ever received a 100-page financial plan from your advisor only to find out that less than 10 of those pages were useful? Typically, only a few pages of a financial plan will focus on strategy and investment choices; the rest usually cover fee breakdowns, risk and return explanations, and regulatory compliance disclosures. This may seem overwhelming when only a fraction of the pages are actually helpful! You’re not the only one that may be thinking, “Is this standard or should I consider finding a new advisor?” 

It's a common frustration to receive such extensive documentation from financial advisors, and you're not alone in feeling overwhelmed by the sheer volume of compliance and disclosure paperwork. However, understanding the reasons behind this paperwork can help clarify its purpose and whether your current advisor is meeting your needs effectively. 

Why So Much Paperwork? 

The bulk of the paperwork you received is largely due to regulatory requirements, as much of it is mandated by the government to ensure transparency and protect clients. This is intended to prevent advisors from withholding critical information and to mitigate potential liability issues. 

These compliance documents are standardized across the industry. While they might seem redundant or excessive, they are required for maintaining legal compliance and ensuring that all advice provided aligns with regulatory standards. This practice safeguards clients by ensuring consistent and transparent financial guidance. 

Is The Paperwork Really Worth It?  

Despite the apparent redundancy, the inclusion of comprehensive disclosures and compliance documents can actually add value to the financial services you receive if done properly. Some certified financial planners have pointed out that these documents are akin to the terms of service agreements we routinely accept without reading. They are there to validate the rationale behind the recommendations made by your advisor.  While the majority of clients might not initially engage with these detailed reports, they often find them valuable as they revisit and review their financial plans over time. 

With that said, that still doesn’t mean that your advisor should leave you to your own devices when trying to interpret the lengthy plan. In fact, a good advisor should put things in a simple, easy-to-understand format so that you feel comfortable and confident with your plan.  For example, an advisor should be willing to explain the necessity of these documents and provide clear, concise key points and summaries that align with your goals and understanding. Unfortunately, we often see that some advisors fail to take these extra steps.   

Evaluating Your Advisor 

If you’re feeling frustrated and overwhelmed, it’s essential to assess whether your advisor is truly meeting your expectations. If you feel that your advisor is not providing adequate explanations or personalized attention, it might be time to consider a change. 

You also want to be sure that your advisor isn’t more focused on fulfilling compliance obligations than addressing your specific needs and concerns. While compliance is a necessity, it’s not going to help you build your nest egg for a long and happy retirement. 

Finally, you’ll want to take a look at the fees your advisor is charging you. Remember, he or she is likely charging you the same amount of fees whether your investments are making money or losing money, so it is their job to make sure you understand and feel confident in your financial plan. 

Moving Forward 

Regardless of the length of the financial plan, if you feel that communication with your current advisor is lacking, or that they are adding further stress to your financial planning process, it may be time to consider a change. Furthermore, you shouldn’t have to pay a ton of fees in order to get the service you are looking for. 

At Summerlin Benefits Consulting, we specialize in safe strategies for retirement using proven insurance products to accomplish this. We don’t charge our clients management fees, as our goal is to help clients build their nest eggs, not deplete them.  And, simplicity is one of our three core values. We work hard to keep things simple and easy-to-understand for our clients. If you’d like a no-obligation financial review from a team of financial insurance professionals, give us a call today!