Look out for warning indicators when working with a monetary advisor

Everyone knows the stories of famous entertainers (Sting, Rihanna) or athletes (Kareem Abdul-Jabbar, Floyd Mayweather) being exploited by their financial advisors.

Sting's financial advisor went to jail for six years for stealing $ 1.6 million, and Abdul-Jabbar lost millions when his advisor used his money on shady real estate deals. Rihanna settled a lawsuit against former accountants that cost her millions, and Mayweather's money worries are almost a TKO.

That happens to the biggest stars and the little ones too.

And it can happen to you.

Due to the bad reputation of some financial advisors, people are usually wary of whom to choose to assist them with their personal financial management. But if extremely wealthy people can make mistakes, so can those for whom every dollar counts.

You have taken precautions when choosing your own financial advisor, maybe even used our five-question guide and hopefully you are completely satisfied with the way your finances are handled.

Look out for these 6 red flags

If you have any questions about how your financial advisor works, here are 6 signs you are getting the right form of financial advice.

1. The payment plan is lazy or unclear

Obviously, financial advisors charge fees for their services. You can make a living, right?

However, if you are unsure of how much you are paying him (if your payments are from your account with your advisor) or if you don't understand all of the fees that appear on your bank statement, then you need to ask questions.

Assuming that most financial advisors are on the rise, they will explain their fees in full. If you tell them you feel like you are paying too much, good counselors will discuss ways to lower your fees and still get the services you want.

You need to do some research if your advisor cannot fully explain their fees, or if they receive commissions on the products or services you have invested in.

Any attempt to avoid declarations of fees and services is a red flag. (A lot of commission-based investments disappeared after the Great Recession, and most of your payments to your advisor are likely to be chargeable).

2. Negotiating fees is a no-no (says the advisor)

There are basically two fee-based platform consultants: fees based on hours or fees based on a percentage of the assets under management.

Hourly fees can be difficult to understand, but you should encourage your advisor to explain them. Fees based on assets under management are often more expensive, at least on the surface, but you can ask your advisor if there is any way to reduce costs for you.

If your advisor is hesitant about any of these conversations, you may need to consider finding a more responsive financial advisor.

3. It is difficult to get straight answers

Does your financial advisor react to your attempts to communicate with him? When you reach out to your advisor, do you feel like they are really listening to you? Has your advisor ever avoided communicating with you?

Use your instincts when you have concerns about your counselor's communication habits. Remember, you are the boss in this scenario.

You can certainly assess your advisor's listening habits by looking at how your accounts are managed. Is there a fee you pay or a service you get that you don't understand?

In this situation, it is wise to keep all of your financial advisor or vendor account information and to compare them from time to time. Are you paying for too many or too few transactions? Is your account as active as you want it to be or as passive as you want it to be?

You have probably told your advisor how you would like to handle your finances. If he or she does not do your best, even slightly, you need to have a conversation.

4. The word on the street (or on the internet) is no good

Hopefully, before you started working with your financial advisor, you should have examined his legal history. It is easy enough to do.

Using the Securities and Exchange Commission's Investment Advisor Public Disclosure or Finra BrokerCheck, you can put your advisor's name into a search engine and let you know if complaints have been made against your advisor, either from consumers or vendors who work with that person.

Let's say you verified these accounts the first time you signed in. It is advisable to check again from time to time. Something might have come up in the past few years that you need to know about.

This is not infidelity: again, remember to keep tabs on the person to whom you have entrusted the safety and growth of your personal finances. It is good to know that your advisor is not carrying any new regulatory baggage.

5. You feel pushed around

Depending on your risk tolerance, you might want an advisor to look for new and better ways to invest or protect your money.

However, if in your normal monthly or quarterly conversations with your advisor you begin to push you into an investment that you are not sure about, consider this a red flag. It is possible that you will be encouraged to invest in a product that is better for the advisor than it is for you.

6. He hates being controlled

Having an active account with a financial advisor is not a checking or savings account. The account you have with your financial advisor is more of a living, breathing reflection of your financial condition.

Even though you may not regularly check your 401 (k) and you don't know the exact amount in your standard savings account, you need to know what is happening to the assets your financial advisor manages.

The people who get ripped off by financial advisors are the ones who are not careful. While you are hiring an advisor so you don't have to worry about the potential for growth of your wealth on a daily basis, you need to regularly worry about whether your wealth is being properly managed.

Consultants who do their job right won't mind you reviewing them. After all, they know the reputation of their profession as well as you do.

Kent McDill is a seasoned journalist who has specialized in personal finance topics since 2013. He is a contributor for The Penny Hoarder.

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