The Do’s and Don’ts of Communicating with Your Financial Advisor

Effective communication with your financial advisor is the cornerstone of a successful financial planning relationship. Whether you’re just starting to work with an advisor or have been collaborating for years, understanding the best practices for communication can significantly impact your financial outcomes. Financial advice is only as good as the relationship behind it, and that relationship depends on clear, honest, and consistent dialogue between you and your advisor.

The quality of your communication directly influences how well your advisor can understand your needs, tailor strategies to your situation, and help you navigate both opportunities and challenges. This comprehensive guide explores the essential do’s and don’ts of communicating with your financial advisor, helping you build a stronger partnership and achieve your financial goals more effectively.

Why Communication Matters in Financial Advisory Relationships

Clients want to feel heard, informed, and valued. When you listen with empathy, follow through on your promises, and keep clients in the loop without overwhelming them, you build the kind of trust that survives market downturns and life changes alike. The foundation of any successful financial advisory relationship is built on trust, and trust is cultivated through effective communication.

Implementing personalized, simplified, and consistent client communication strategies pays dividends. It builds trust, which is the foundation of successful, long-term advisory relationships. When communication flows smoothly in both directions, you’re more likely to stay engaged with your financial plan, understand the reasoning behind recommendations, and feel confident in your financial decisions.

Financial advisor client communication is more than just how often you interact — it’s also about the quality of those interactions. Improving your communication is critical for building strong advisor client relationships. The relationship you develop with your advisor can set you apart from simply having a transactional service provider to having a trusted partner who genuinely understands your financial aspirations and concerns.

Do: Be Honest and Transparent About Your Financial Situation

Honesty forms the bedrock of any productive advisor-client relationship. When it comes to creating a trusted relationship with your financial advisor, it’s important to share a full picture of your financial situation—warts and all. Your advisor needs complete and accurate information to provide recommendations that truly serve your best interests.

Share all relevant financial information with your advisor, including your income from all sources, outstanding debts, existing investments, insurance policies, and any other financial obligations or assets. This includes information that might feel uncomfortable to disclose, such as credit card debt, student loans, or past financial mistakes. That way, you have a better chance of receiving advice that’s accurate, relevant, and actionable.

This may feel uncomfortable, especially if you have debt (like student loans or credit card debt) or feel like you could be doing better with your money. Know that your advisor isn’t here to judge you—their goal is to help you get to where you want to be. Remember that financial advisors have seen countless situations and are trained to help clients regardless of their starting point.

What Information to Share

When preparing to communicate with your advisor, gather comprehensive information about your financial life. Aim to gather as complete a picture as possible of your finances before the meeting, including: Bank account balances, including checking, savings and other deposit accounts · Details on other investment interests and valuable assets · Balances for any employer-sponsored retirement plans, including pension information.

To be able to discuss your finances with your financial advisor, it is imperative to have an idea of all your sources of income and expenses. It is always better to write these down so that you don’t miss adding petty expenses or any small income. Creating a comprehensive list ensures nothing important gets overlooked during your conversations.

Beyond the numbers, be transparent about your investment preferences, risk tolerance, and any concerns you have about your financial future. Don’t be afraid to express any concerns—such as market volatility, healthcare costs, or supporting adult children. These personal details help your advisor understand not just your financial situation, but also your emotional relationship with money and your priorities.

Don’t: Withhold Important Details or Hide Financial Problems

While it might be tempting to present only the positive aspects of your financial situation, withholding critical information can seriously undermine your advisor’s ability to help you. Omitting details about debts, risky investments, or financial obligations can lead to recommendations that don’t account for your complete picture, potentially putting your financial security at risk.

Hidden debts, undisclosed income sources, or concealed investment accounts can create blind spots in your financial plan. Your advisor might recommend strategies that seem appropriate based on partial information but could actually conflict with aspects of your financial life they don’t know about. This can result in missed opportunities, inappropriate risk levels, or strategies that simply won’t work given your actual circumstances.

Financial advisors are bound by confidentiality agreements and professional ethics. The information you share remains private and protected. There’s no benefit to hiding financial problems from someone whose job is to help you solve them. In fact, the sooner you disclose challenges, the more options your advisor typically has to address them effectively.

Common Information Clients Mistakenly Withhold

Many clients hesitate to disclose certain types of information, often out of embarrassment or fear of judgment. However, these are precisely the details that can make the biggest difference in the quality of advice you receive:

• Outstanding credit card balances or high-interest debt
• Previous bankruptcy or financial difficulties
• Investments made without the advisor’s knowledge
• Anticipated major expenses or financial obligations
• Health issues that could impact earning capacity or create future expenses
• Family financial obligations, such as supporting aging parents or adult children
• Marital or relationship issues that could affect finances
• Business ownership or side income sources

Whatever you do, don’t shy away from this topic—even if you don’t feel good about your current status. Your advisor has likely encountered similar situations many times before and can provide valuable guidance regardless of where you’re starting from.

Do: Ask Questions and Seek Clarification

Never hesitate to ask questions about anything you don’t understand. The meeting isn’t just a one-way street: Ask questions of the advisor. Ask about risk management, investment strategy, and fees. Find out how the advisor would tailor the plan to meet your needs and address your concerns. Your financial plan only works if you understand it and feel confident in the strategies being implemented.

Asking questions ensures you’re not just passively receiving advice but actively participating in your financial planning process. This engagement helps you make more informed decisions and increases your commitment to following through on recommendations. When you understand the reasoning behind a strategy, you’re more likely to stick with it during challenging times.

Be prepared for your first meeting — and ask lots of questions. This advice applies not just to initial meetings but to every interaction with your advisor. Financial concepts can be complex, and there’s no such thing as a “stupid question” when it comes to your money.

Important Questions to Ask Your Financial Advisor

Consider asking questions in these key areas to ensure you fully understand your financial plan and the advisory relationship:

About Investment Strategy

Is my portfolio aligned with my long-term goals? Am I taking the appropriate amount of risk? These fundamental questions help ensure your investments match your objectives and comfort level. Additionally, ask about the reasoning behind specific investment recommendations and how they fit into your overall strategy.

When discussing this, ask about their approach to diversification, risk tolerance assessment, and alignment with your financial goals. Understanding these elements helps you evaluate whether the proposed strategy makes sense for your situation.

About Fees and Compensation

Clarity about fees is vital to a client’s investment decisions and to a successful relationship. Fees and expenses — whether they’re a percentage of assets, a flat fee or a per-transaction charge — should be considered as a final important step in selecting an advisor. Don’t be shy about asking for a complete breakdown of all costs associated with your advisory relationship.

About Communication and Access

You’ll also want to know what kind of access you’ll have to the advisor — whether you can call or email versus catching up only at scheduled meetings. Understanding communication expectations from the beginning helps prevent frustration and ensures you can reach your advisor when you need guidance.

About Your Financial Plan

Ask how your advisor will help you track progress toward your goals, what benchmarks will be used to measure success, and how often your plan will be reviewed and updated. Ask the advisor if they can help you create a financial road map or plan for pursuing your goals — one that you can review together at least once a year. Life has a way of changing, too — sometimes without notice — so the advisor you select should encourage you to reach out whenever your situation changes.

Don’t: Make Sudden Financial Decisions Without Consulting Your Advisor

One of the most common mistakes clients make is acting impulsively on financial matters without first consulting their advisor. Whether it’s making a large purchase, changing investment allocations, or accepting a new job offer, sudden decisions made in isolation can undermine your carefully constructed financial plan.

Your financial advisor has a comprehensive view of your financial situation and understands how different pieces fit together. A decision that seems isolated—like withdrawing money from a retirement account or making a large investment—can have ripple effects throughout your financial life, affecting taxes, retirement projections, risk levels, and more.

Impulsive actions are often driven by emotion rather than strategy. Investing decisions driven by emotion are rarely in your best interest. During periods of market volatility, for example, the urge to sell investments or make dramatic changes can be strong, but these reactions often lead to poor outcomes. Your advisor can provide perspective and help you avoid costly mistakes driven by fear or excitement.

When to Contact Your Advisor Before Acting

Reach out to your advisor before making decisions in these areas:

• Major purchases such as real estate, vehicles, or luxury items
• Job changes, especially those involving stock options, retirement plan rollovers, or significant salary changes
• Inheritance or windfall receipts
• Changes to investment allocations or selling investments
• Taking loans or making early withdrawals from retirement accounts
• Starting a business or making significant business investments
• Major life changes such as marriage, divorce, or having children
• Estate planning decisions

It may be helpful to meet with an advisor whenever there are major updates to tax laws or you have a life event or any other change that may require an update to your plan. Even if a decision seems straightforward, a quick consultation can help you understand the full implications and potentially identify better alternatives.

Do: Maintain Regular and Consistent Communication

Consistency in communication is essential for a healthy advisor-client relationship. Clients who hear from their advisors more frequently report higher confidence in their financial plans and a better understanding of their overall strategy. Regular contact keeps you informed, engaged, and confident in your financial direction.

Most advisors touch base at least quarterly, which means if you’re doing less than that, you’re falling behind industry norms. However, the ideal frequency depends on your individual needs and preferences. Some clients will want monthly touchpoints, others will be fine with less frequent contact. The key is establishing a rhythm and sticking to it.

Consistency is the lynchpin of a solid communication strategy. When you maintain regular contact with your advisor, you’re more likely to stay on track with your financial goals, address issues before they become problems, and take advantage of opportunities as they arise.

Types of Regular Communication

Regular communication with your advisor can take many forms:

Scheduled Review Meetings

These comprehensive meetings typically occur annually or semi-annually and involve a thorough review of your entire financial situation, progress toward goals, and any necessary adjustments to your plan. In initial meetings, an advisor will likely analyze your current financial picture and discuss where you might hope to be in 10 years, 20 years, and even beyond. Subsequent meetings build on this foundation, tracking progress and adapting to changes.

Quarterly Check-ins

Shorter, more focused conversations that address recent market activity, portfolio performance, and any immediate questions or concerns. These check-ins help maintain momentum and ensure you’re staying engaged with your financial plan.

Proactive Updates

Even a quick email during a week of market volatility can prevent unnecessary worry and show clients you’re on top of things. Your advisor should reach out proactively during significant market events, when relevant tax law changes occur, or when opportunities arise that might benefit your situation.

As-Needed Communication

Don’t wait for scheduled meetings if something important comes up. Advisors should feel confident that clients want to hear from them. It’s especially important to carve out space in your communications plan for both reactive and proactive engagement. Reach out whenever you have questions, concerns, or life changes that might affect your financial plan.

Establishing Communication Preferences

Clients differ in age, habits, and responsiveness. Some prefer text messages, others respond to phone calls or email. Advisors should learn each client’s preferred method and use it consistently when appropriate. Have an open conversation with your advisor about how you prefer to communicate and how often you’d like to hear from them.

While 72% of clients prefer their advisors to send general updates and educational materials via email, 51% of clients prefer to resolve potential challenges over the phone. Your preferences might differ, so make sure your advisor understands what works best for you.

Don’t: Ignore Communications from Your Advisor

Just as your advisor should maintain regular contact with you, you should be responsive to their communications. Ignoring emails, not returning phone calls, or consistently missing scheduled meetings can create gaps in your financial plan and prevent your advisor from serving you effectively.

Your advisor may be reaching out for important reasons—to alert you to time-sensitive opportunities, warn you about potential issues, or gather information needed to complete important tasks. When you don’t respond, you may miss deadlines, lose opportunities, or leave important matters unresolved.

For 90% of clients, an immediate response is expected—the majority defining an immediate response as under 10 minutes. While you may not always be able to respond immediately, acknowledging receipt of communications and providing a timeframe for a more detailed response shows respect for the relationship and keeps things moving forward.

Why Clients Sometimes Avoid Communication

Understanding why you might be avoiding your advisor’s communications can help you address the underlying issue:

• Fear of bad news: If markets are down or you’ve made financial mistakes, you might avoid contact to delay facing the reality. However, early communication about problems typically leads to better solutions.
• Feeling overwhelmed: Financial information can be complex and overwhelming. If this is the case, let your advisor know you need information presented in simpler terms.
• Busy schedule: Life gets hectic, but financial matters shouldn’t be perpetually deprioritized. Schedule specific times to review and respond to advisor communications.
• Lack of understanding: If you don’t understand why your advisor is reaching out or what they’re asking for, request clarification rather than ignoring the communication.

Do: Set Clear and Realistic Financial Goals

Clear goal-setting is fundamental to effective financial planning and communication. Before your first meeting with a financial advisor, think through your biggest hopes and dreams. Talk it over with your loved ones and consider setting aside some time for deep reflection on what your needs and wishes for the future are. No matter what you come up with, it’s a good idea to have a full list of possibilities to discuss with the advisor.

Your goals provide the framework for all financial planning decisions. Without clear objectives, it’s difficult for your advisor to recommend appropriate strategies or measure progress. Goals also help you stay motivated and committed to your financial plan, especially during challenging times.

Think about your financial goals and whether you’re primarily focused on preserving wealth, planning for long-term care, passing your assets along to the next generation, or something else. Having a clear idea of your priorities will help guide the discussion. Your goals might include short-term objectives like building an emergency fund, medium-term goals like buying a home, and long-term aspirations like retirement or leaving a legacy.

Characteristics of Effective Financial Goals

Well-defined financial goals share several characteristics that make them more achievable:

Specific and Measurable

Instead of “save more money,” a specific goal would be “save $50,000 for a down payment on a house.” Measurable goals allow you and your advisor to track progress and know when you’ve achieved success.

Time-Bound

Attach timeframes to your goals. “Retire comfortably” becomes more actionable as “retire at age 65 with $2 million in retirement savings.” Time horizons help your advisor determine appropriate investment strategies and savings rates.

Realistic Yet Aspirational

Goals should stretch you without being impossible. Your advisor can help you assess whether your goals are achievable given your current situation and what adjustments might be necessary to reach them.

Prioritized

You likely have multiple financial goals, but they can’t all be top priority. Work with your advisor to rank your goals so resources can be allocated appropriately. This prioritization helps when trade-offs are necessary.

Flexible

Life is filled with changes, and your financial plan will need to evolve too. Consider meeting with an advisor or other financial professional on a regular basis, and whenever you have a significant life change, to make sure your financial plan is up to date and reflects your family’s current needs and goals. Your goals should be firm enough to provide direction but flexible enough to adapt to life’s changes.

Don’t: Have Unrealistic Expectations About Returns or Timelines

While it’s important to have ambitious goals, unrealistic expectations about investment returns or how quickly you can achieve financial objectives can lead to disappointment and poor decision-making. No advisor can or should promise financial results. And beware of those who do.

Markets fluctuate, and even well-designed investment strategies experience periods of underperformance. Expecting consistently high returns or believing you can achieve decades worth of wealth accumulation in just a few years sets you up for frustration and may tempt you to take inappropriate risks or abandon sound strategies prematurely.

Your advisor should provide realistic projections based on historical data, current market conditions, and your specific situation. These projections typically include a range of potential outcomes rather than guaranteed results. Understanding and accepting this uncertainty is crucial for maintaining a long-term perspective.

Common Unrealistic Expectations

• Expecting to “beat the market” consistently: Even professional fund managers rarely outperform market benchmarks consistently over long periods.
• Believing you can retire early without significant sacrifices: Early retirement requires either substantial savings, reduced spending, or both.
• Thinking you can make up for lost time quickly: Starting to save late requires either higher contributions or more risk, and there are limits to both.
• Assuming markets will always go up: Market downturns are normal and should be expected as part of long-term investing.
• Expecting immediate results: Wealth building is typically a gradual process that requires patience and consistency.

Do: Communicate Life Changes and Major Events Promptly

Health issues, layoffs, or family developments affect finances. Advisors should approach these topics carefully and show genuine concern while gathering necessary information. Significant life events can have major implications for your financial plan, and your advisor needs to know about them to help you navigate the changes effectively.

Many people turn to an advisor when something happens—positive or negative—because they realize their money needs have changed. Discussing life events with a financial professional can help you adjust for new circumstances. Don’t wait for your next scheduled meeting if something significant occurs—reach out to your advisor as soon as possible.

Life Events That Require Advisor Communication

Inform your advisor promptly about these types of life changes:

Family Changes

• Marriage or partnership
• Divorce or separation
• Birth or adoption of children
• Death of a spouse or family member
• Adult children moving back home or requiring financial support
• Caring for aging parents

Career and Income Changes

• Job loss or career change
• Significant salary increase or decrease
• Starting a business
• Receiving stock options or equity compensation
• Retirement or semi-retirement
• Returning to work after time away

Health-Related Events

• Serious illness or injury
• Disability that affects earning capacity
• Long-term care needs for yourself or family members
• Changes in health insurance coverage

Financial Windfalls or Setbacks

• Inheritance
• Lawsuit settlement
• Sale of a business or property
• Significant unexpected expenses
• Bankruptcy or major debt issues

It may not always be possible to have an immediate in-person conversation, as your client may be busy dealing with the matter at hand, especially if it’s a personal matter. Maintaining a healthy and respectful tone, regardless of the communication method, is key. It may also be useful to follow up, not necessarily to request a meeting, but to show support for your client. Your advisor should be understanding and supportive during difficult times while helping you make necessary financial adjustments.

Don’t: Let Embarrassment Prevent Important Conversations

Financial matters can feel deeply personal, and it’s natural to feel embarrassed about certain situations—whether it’s accumulating debt, making poor investment decisions, or falling short of savings goals. However, letting embarrassment prevent honest communication with your advisor only compounds problems and limits your advisor’s ability to help.

Opening up to a stranger isn’t always easy, especially when the information you need to discuss is intensely personal. For example, it may feel uncomfortable to disclose certain symptoms or habits to a new doctor or to confide in a new friend or acquaintance for fear of judgment. But as with personal relationships, trust is the foundation for successful professional relationships.

There are no right or wrong answers to these questions. A professional advisor shouldn’t judge you for your philosophy on life, your approach to managing money, your personal interests, or your relationships. The goal is to help you be successful on your terms. Remember that your advisor’s role is to help, not to judge.

Overcoming Communication Barriers

If embarrassment or discomfort is preventing you from communicating openly with your advisor, try these approaches:

• Remember confidentiality: Your advisor is bound by professional confidentiality requirements. What you share stays private.
• Start with written communication: If discussing something in person feels too difficult, consider sending an email first to break the ice.
• Focus on solutions: Frame the conversation around moving forward rather than dwelling on past mistakes.
• Acknowledge your feelings: It’s okay to tell your advisor that something is difficult to discuss. Most will appreciate your honesty and work to make you more comfortable.
• Remember their experience: Your advisor has likely encountered similar situations many times and won’t be shocked or judgmental.

Do: Review Your Portfolio and Financial Plan Regularly

Regular review of your portfolio and financial plan is essential for staying on track toward your goals. Over the years, that strategy will likely need to be adjusted and refined, based on life circumstances, family changes, the economic climate, and new laws that may be passed. What worked perfectly five years ago may no longer be appropriate for your current situation.

Portfolio reviews allow you to assess whether your investments are performing as expected, whether your asset allocation still matches your risk tolerance and time horizon, and whether any adjustments are needed. These reviews also provide an opportunity to rebalance your portfolio, ensuring that market movements haven’t caused your allocation to drift significantly from your target.

Financial plan reviews take a broader view, examining progress toward all your goals, evaluating whether your savings rate is sufficient, considering tax efficiency, reviewing insurance coverage, and updating estate planning documents. Ask the advisor if they can help you create a financial road map or plan for pursuing your goals — one that you can review together at least once a year.

What to Review During Regular Check-ins

Investment Performance

Evaluate how your investments have performed relative to appropriate benchmarks and whether they’re on track to help you meet your goals. Remember that short-term performance matters less than long-term trends.

Asset Allocation

Confirm that your mix of stocks, bonds, and other investments still aligns with your risk tolerance and time horizon. As you age or as your goals change, your allocation may need adjustment.

Goal Progress

Measure progress toward each of your financial goals. Are you on track to retire when you planned? Is your college savings growing adequately? Are you building your emergency fund as intended?

Risk Management

Review insurance coverage to ensure it’s still adequate. Life changes often require adjustments to life, disability, property, and liability insurance.

Tax Efficiency

Discuss strategies to minimize taxes, including tax-loss harvesting, Roth conversions, charitable giving strategies, and optimal account withdrawal sequencing in retirement.

Estate Planning

Ensure beneficiary designations are current, wills and trusts reflect your wishes, and estate planning documents are up to date with current laws.

Don’t: Set It and Forget It

One of the biggest mistakes investors make is creating a financial plan and then never revisiting it. The “set it and forget it” approach might work for some automated processes, but it’s dangerous when applied to comprehensive financial planning. Markets change, laws change, and most importantly, your life changes.

A financial plan created when you were 35, single, and focused on career growth won’t serve you well at 50 when you’re married with children and thinking about college funding and retirement. Similarly, investment strategies appropriate during your accumulation years may be too aggressive as you approach retirement.

Failing to review and adjust your plan regularly can result in missed opportunities, inappropriate risk levels, outdated estate plans, insufficient insurance coverage, and strategies that no longer align with your goals. The financial landscape is dynamic, and your approach needs to be equally flexible.

Signs Your Plan Needs Immediate Review

While regular scheduled reviews are important, certain situations demand immediate attention:

• Major market volatility or economic changes
• Significant changes in tax laws
• Life events such as marriage, divorce, birth, or death
• Job changes or income fluctuations
• Inheritance or windfall
• Health issues or disability
• Approaching a major milestone (like retirement)
• Feeling anxious or uncertain about your financial situation

Do: Understand Fees and How Your Advisor Is Compensated

This is never an easy question to ask, but advisors should always offer the information. Clarity about fees is vital to a client’s investment decisions and to a successful relationship. Understanding exactly how your advisor is compensated helps you evaluate the value you’re receiving and identify any potential conflicts of interest.

Financial advisors can be compensated in several ways, and the compensation structure can influence the advice you receive. Some advisors are compensated with a fee that’s calculated as a small percentage of your portfolio while others might charge an hourly fee or a flat fee for the year or per session. You may also find advisors who earn commissions by selling investments.

Common Advisor Compensation Models

Assets Under Management (AUM) Fee

The advisor charges a percentage of the assets they manage for you, typically ranging from 0.5% to 2% annually. This model aligns the advisor’s compensation with your portfolio growth but can become expensive as your assets grow.

Hourly Fee

You pay for the advisor’s time, similar to hiring an attorney or accountant. This can be cost-effective for specific projects or occasional advice but may be expensive for ongoing comprehensive planning.

Flat Fee or Retainer

You pay a set annual fee for comprehensive financial planning services, regardless of your asset level. This model provides predictable costs and eliminates conflicts related to asset size.

Commission-Based

The advisor earns commissions from selling financial products like insurance or investments. This model can create conflicts of interest, as advisors may be incentivized to recommend products that pay higher commissions.

Hybrid Model

Some advisors combine multiple compensation methods, such as charging a fee for planning services plus commissions on certain products.

Questions to Ask About Fees

• What is your total compensation for working with me?
• Are there any fees beyond what you charge directly?
• Do you receive any compensation from third parties for recommending specific products?
• How often are fees charged, and how are they calculated?
• Are there any circumstances where fees might increase?
• What services are included in your fee, and what costs extra?

Don’t: Assume All Advisors Operate the Same Way

The financial advisory industry includes professionals with vastly different qualifications, compensation structures, regulatory oversight, and service models. Assuming all advisors are essentially the same can lead to mismatched expectations and potentially unsuitable advice.

Fiduciary duty legally requires an advisor to put your interests first. Ask if they operate as a fiduciary at all times. Registered Investment Advisors (RIAs) are legally bound to this standard. Brokers or insurance agents may only be fiduciaries under specific circumstances. This distinction is crucial because it determines whether your advisor is legally required to prioritize your interests above their own.

Key Differences Among Financial Advisors

Fiduciary vs. Suitability Standard

Fiduciary advisors must act in your best interest at all times. Advisors operating under a suitability standard only need to recommend products that are suitable for you, even if better options exist. Always ask whether your advisor operates as a fiduciary for all services they provide.

Credentials and Qualifications

Advisors may hold various credentials like CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), ChFC (Chartered Financial Consultant), or others. These designations require different levels of education, experience, and ongoing education. Some people calling themselves “financial advisors” may have minimal qualifications.

Scope of Services

Some advisors offer comprehensive financial planning covering investments, taxes, insurance, estate planning, and more. Others focus narrowly on investment management or specific products. Make sure you understand what services your advisor provides and what falls outside their expertise.

Client Focus

Advisors may specialize in serving specific types of clients—retirees, business owners, high-net-worth individuals, or young professionals. An advisor who specializes in your situation may provide more relevant expertise.

Do: Be Patient with Investment Growth and Market Fluctuations

Patience is one of the most valuable traits for successful investing, yet it’s also one of the most challenging to maintain. Markets fluctuate, sometimes dramatically, and it’s natural to feel anxious during downturns. However, reacting emotionally to short-term market movements often leads to poor decisions that undermine long-term success.

Investing decisions driven by emotion are rarely in your best interest. Your financial plan is designed with a long-term perspective, accounting for the reality that markets will experience both gains and losses along the way. Short-term volatility is the price of admission for long-term growth.

Market declines can cause anxiety. Advisors who expect a negative monthly statement should contact sensitive clients before statements arrive. Your advisor should help you maintain perspective during difficult market periods, reminding you of your long-term goals and the reasoning behind your investment strategy.

Why Patience Matters in Investing

Compound Growth Takes Time

The power of compound returns—earning returns on your returns—requires time to work its magic. The longer your investment horizon, the more dramatic the effects of compounding become.

Market Timing Is Nearly Impossible

Attempting to time the market by selling before downturns and buying before upturns sounds appealing but is extremely difficult to execute successfully. Missing just a few of the market’s best days can significantly reduce long-term returns.

Volatility Is Normal

Market corrections (declines of 10% or more) occur regularly, and bear markets (declines of 20% or more) happen periodically. These downturns are normal parts of market cycles, not reasons to abandon your strategy.

Recovery Follows Decline

Historically, markets have always recovered from downturns, though the timing varies. Selling during a decline locks in losses and prevents you from participating in the recovery.

Strategies for Maintaining Patience

• Focus on goals, not account balances: Measure progress toward your specific objectives rather than obsessing over daily portfolio values.
• Limit how often you check your accounts: Constant monitoring increases anxiety without providing actionable information.
• Remember your time horizon: If you’re investing for retirement 20 years away, today’s market movements matter very little.
• Maintain perspective: Review long-term historical market data to remind yourself that volatility is temporary.
• Stay in touch with your advisor: Regular communication helps you maintain confidence in your strategy during challenging times.

Don’t: Panic During Market Downturns

Market downturns trigger powerful emotional responses—fear, anxiety, and the urgent desire to “do something” to stop the losses. However, panic-driven decisions during market declines are among the most costly mistakes investors make. Selling investments after they’ve declined locks in losses and often causes investors to miss the recovery.

An advisor can help offer assurance during these times, by putting the market environment into a broader context and encouraging you to stay invested in your long-term strategy. This is precisely when your relationship with your advisor becomes most valuable—they can provide the rational perspective you need when emotions are running high.

They should be able to offer useful perspective on steps you might take to help minimize the effects of volatility, remind you of reasons for remaining invested, discuss potential opportunities this volatility could create, and talk about whether you should consider any adjustments to your financial strategy. Rather than making dramatic changes, work with your advisor to understand whether any strategic adjustments make sense for your situation.

Why Panic Selling Hurts Returns

Research consistently shows that investors who panic and sell during downturns significantly underperform those who stay invested. The reasons are clear:

• You sell low: Panic typically peaks near market bottoms, causing investors to sell at the worst possible time.
• You miss the recovery: Market recoveries often begin suddenly and powerfully. Investors who sold during the decline frequently miss the initial recovery, which captures a large portion of the total gains.
• You face difficult re-entry decisions: Once you’ve sold, you must decide when to buy back in—another emotional decision that’s difficult to get right.
• You incur unnecessary costs: Selling and later repurchasing investments generates transaction costs and potentially significant tax consequences.

What to Do Instead of Panicking

When markets decline and anxiety rises, take these steps instead of making impulsive changes:

• Contact your advisor: Discuss your concerns and get their perspective on the situation.
• Review your financial plan: Remind yourself of your long-term goals and the strategy designed to achieve them.
• Assess your risk tolerance: If market volatility is causing unbearable stress, you may need to adjust your allocation—but do so thoughtfully with your advisor’s guidance, not impulsively.
• Consider opportunities: Market declines can create opportunities to rebalance, harvest tax losses, or invest additional funds at lower prices.
• Limit media consumption: Constant exposure to alarming financial news amplifies anxiety without providing useful information.

Do: Provide Feedback on Your Advisor Relationship

Your advisor can’t improve their service or better meet your needs if you don’t provide feedback. The simplest and most effective way to find out what your clients want is to ask them. You can create a financial advisor client communication survey and have them respond anonymously to share insight about what they’d like you to change or improve. Similarly, you should feel comfortable sharing your thoughts about what’s working well and what could be better.

Effective feedback helps your advisor understand your preferences, adjust their communication style, and tailor their services to better serve you. It also strengthens the relationship by demonstrating that you’re engaged and invested in making the partnership successful.

Areas to Provide Feedback On

Communication Style and Frequency

Let your advisor know if you’d prefer more or less frequent contact, different communication methods, or adjustments to how information is presented. Adjusting communication frequency and style to match client preferences helps ensure you’re getting the level of service that works for you.

Meeting Structure

Share your thoughts on meeting length, format (in-person vs. virtual), agenda, and whether you’re getting enough time to ask questions and discuss concerns.

Information Presentation

If reports or explanations are too technical or not detailed enough, say so. Your advisor can adjust how they present information to match your level of financial knowledge and interest.

Responsiveness

If you’re not getting responses as quickly as you’d like, or if you feel your advisor is contacting you too frequently, provide that feedback so expectations can be aligned.

Service Gaps

If there are areas where you need more support or services you wish your advisor offered, discuss these needs. Your advisor may be able to expand their services or refer you to appropriate specialists.

How to Provide Constructive Feedback

• Be specific: Rather than “I’m not happy with our communication,” try “I’d prefer to receive portfolio updates monthly rather than quarterly.”
• Be timely: Address issues relatively soon after they occur rather than letting frustrations build.
• Be balanced: Acknowledge what’s working well in addition to areas for improvement.
• Be solution-oriented: When possible, suggest specific changes that would better meet your needs.
• Be open to dialogue: Your advisor may have reasons for their current approach and may suggest alternative solutions.

Don’t: Stay with an Advisor Who Isn’t Meeting Your Needs

While building a long-term relationship with your advisor has many benefits, loyalty shouldn’t prevent you from making a change if the relationship isn’t working. If your advisor consistently fails to meet your needs, doesn’t communicate effectively, or doesn’t act in your best interest, it may be time to find a new advisor.

They’ll leave for an advisor who makes them feel heard and informed. This applies to you as well—you deserve an advisor who provides excellent service and makes you feel valued.

Warning Signs It May Be Time to Change Advisors

• Poor communication: Your advisor is consistently unresponsive, doesn’t return calls or emails promptly, or fails to keep you informed.
• Lack of personalization: You receive generic advice that doesn’t account for your specific situation, goals, or concerns.
• Unclear or excessive fees: You don’t understand what you’re paying or feel the fees are too high for the value received.
• Pressure to make decisions: Your advisor pushes you toward specific products or strategies without adequately explaining alternatives.
• Conflicts of interest: You discover your advisor is recommending products primarily because they generate higher commissions.
• Lack of expertise: Your advisor doesn’t have the knowledge or experience to address your specific needs.
• No fiduciary commitment: Your advisor won’t commit to acting as a fiduciary and putting your interests first.
• Personality mismatch: Despite good faith efforts, you simply don’t connect well with your advisor.
• Ignored concerns: You’ve provided feedback about issues, but nothing changes.

How to Make a Change

If you decide to change advisors, approach the transition thoughtfully:

• Research potential new advisors thoroughly before making a change
• Understand any fees or penalties associated with moving your accounts
• Request copies of all important documents before leaving
• Ensure there’s no gap in service during the transition
• Be professional when ending the relationship, even if you’re frustrated

Do: Educate Yourself About Financial Matters

While your advisor provides expertise and guidance, taking an active interest in your own financial education makes you a better client and helps you make more informed decisions. You don’t need to become a financial expert, but understanding basic concepts helps you have more productive conversations with your advisor and feel more confident about your financial plan.

By simplifying financial concepts, encouraging open communication, and using plain language, financial professionals can ensure that clients truly understand the advice and recommendations provided. Your advisor should be willing to explain concepts in terms you understand, but your own efforts to learn will enhance the relationship.

Key Financial Concepts to Understand

Investment Basics

Learn about different asset classes (stocks, bonds, real estate, etc.), how diversification works, the relationship between risk and return, and the impact of fees on long-term returns.

Retirement Planning

Understand different retirement account types (401(k), IRA, Roth IRA, etc.), contribution limits, tax implications, and withdrawal rules. Know how Social Security works and when to claim benefits.

Tax Efficiency

Learn about tax-advantaged accounts, capital gains taxes, tax-loss harvesting, and strategies to minimize your tax burden while staying compliant with tax laws.

Insurance

Understand the purpose and types of life insurance, disability insurance, long-term care insurance, and liability coverage. Know what you need and why.

Estate Planning

Learn about wills, trusts, beneficiary designations, powers of attorney, and health care directives. Understand how assets pass to heirs and strategies to minimize estate taxes.

Resources for Financial Education

• Books on personal finance and investing
• Reputable financial websites and blogs
• Educational content from regulatory agencies like the SEC and FINRA
• Webinars and workshops offered by financial institutions
• Podcasts focused on personal finance topics
• Educational materials provided by your advisor

Do: Understand the Importance of Documentation

Written communications can appear in court and arbitration cases years later. Advisors must assume every message may become evidence. They should review content carefully before sending any written communication. This principle applies to clients as well—maintaining good records of your communications and financial decisions protects both you and your advisor.

What to Document

• Meeting notes: Keep records of what was discussed in meetings, decisions made, and action items for both you and your advisor.
• Email correspondence: Save important emails discussing strategies, recommendations, or decisions.
• Account statements: Retain statements showing account balances, transactions, and performance.
• Financial plans: Keep copies of written financial plans and updates.
• Fee disclosures: Maintain records of fee agreements and disclosures.
• Investment policy statements: If you have a written investment policy, keep it accessible for reference.

After a client call or meeting, it can be helpful to send a summary to your client, highlighting who is responsible for what. Perhaps you owe them a revised financial plan, but you need a few documents first. Sending this list will incite client engagement. These summaries create a clear record of agreements and responsibilities.

Building a Successful Long-Term Advisory Relationship

The relationship between you and your financial advisor is a partnership that, when functioning well, can last for decades and significantly impact your financial success. According to ThinkAdvisor, strong communication drives long term client relationships in the advisory business. Many industry professionals recognize that at least six meaningful contacts each year help clients feel properly served.

Truly connect with clients so they feel valued as real people, not just portfolios. Make discussions relatable, focus on active listening, and lead with you showing genuine interest and empathy. Demonstrate you “feel their pain” during life’s twists then arm them with practical guidance. This human connection, combined with technical expertise, creates a relationship that can weather market volatility, life changes, and the inevitable challenges that arise over time.

By following the do’s and avoiding the don’ts outlined in this guide, you’ll be well-positioned to build and maintain a productive, trusting relationship with your financial advisor. Remember that communication is a two-way street—both you and your advisor have responsibilities to make the relationship work. When both parties commit to open, honest, and regular communication, the result is a partnership that helps you achieve your financial goals and provides peace of mind along the way.

Key Takeaways for Effective Advisor Communication

As you work to improve communication with your financial advisor, keep these essential principles in mind:

• Honesty is non-negotiable: Complete transparency about your financial situation enables your advisor to provide the best possible guidance.
• Questions are encouraged: Never hesitate to ask for clarification or additional information about anything you don’t understand.
• Consistency matters: Regular communication keeps you engaged, informed, and on track toward your goals.
• Life changes require updates: Promptly inform your advisor about significant life events that could affect your financial plan.
• Patience pays off: Long-term investing requires patience and the discipline to avoid emotional reactions to short-term market movements.
• Feedback improves service: Share your thoughts about what’s working and what could be better in your advisor relationship.
• Education empowers you: Taking an interest in financial education makes you a more informed and engaged client.
• Documentation protects everyone: Maintain good records of communications, decisions, and important documents.

The quality of communication between you and your financial advisor directly impacts the quality of advice you receive and your likelihood of achieving your financial goals. By implementing these best practices, you’ll build a stronger, more productive relationship that serves you well for years to come.

For more information on building strong financial relationships, visit the Certified Financial Planner Board of Standards or explore resources at the Financial Industry Regulatory Authority. You can also learn more about fiduciary standards at the Securities and Exchange Commission website, and find educational resources about investing at Investor.gov. For guidance on selecting a financial advisor, the National Association of Personal Financial Advisors offers valuable information about fee-only financial planning.