Are Second Opinions a New Normal for Financial Advice?

When faced with even a moderately concerning medical condition, nearly every patient gets a second opinion, or even a third and fourth these days. This was not the case 40 years ago when the advice of the family  General Practitioner was taken at face value and the notion of questioning your doctor was largely unthinkable.

In today’s world, the confluence of a number of trends have elevated the awareness of patients to seek multiple medical opinions. First, the growth of media and investigative journalism has made the populace more aware that medical doctors can make mistakes and that medicine itself is not an exact science. Second, the creation of sites like WebMD have made patients more educated. Third, the explosive availability of information and applications on the web has made searching for competing doctors very easy. Most patients these days are much better consumers of medical services and health overall has improved globally.

Financial Advice, like medicine, is also going through a positive change in that getting a second opinion on your portfolio or financial plan is becoming more and more common. Investors are becoming more aware that financial advice, like medicine, is not an exact science and therefore getting more information and data inputs can improve the outcome.

Similar to your General Practitioner, getting a second opinion does not mean you necessarily change your financial advisor. You might be concerned about a particular fund, you might be inquisitive about annuities but your primary advisor is not a fan, or you might be concerned about a lack of exposure to international equities. Getting another advisor to opine on your concerns can be a very healthy and informative practice.

When getting a second opinion it is helpful to be aware of several practical realities. First, the person giving you a second opinion has a natural human inclination to say something that means a change to the current course of action. However, current and recent rules do make it harder for an advisor to make suggestions just to get your account, but have that in the back of your mind. This said, the majority of advisors will give you an honest opinion on your situation and if there is no real change needed, most will simply tell you just that.

Second, getting a second opinion may cost a few hundred dollars which is fair and normal depending on the issue. For example, you may have many old 401k accounts that you’ve been wanting to consolidate, but your current advisor is focused on managing your taxable account and these old 401ks are smaller than his normal minimum. Hiring an hourly financial planner is a good route to go. Another example is that your current advisor has very little fixed income in your portfolio, and you are six years from retirement and worried about equity exposure. Another advisor’s opinion may either reinforce your current plan is appropriate or may raise good questions on your path.

Whatever your concern, in this day and age it is smart to realize that no professional in any industry is all-knowing. Getting a second opinion on something as critical as your wealth will at least increase your own awareness, or improve your situation by revealing an area of improvement.

Related: Generation Alpha Is Ready to Invest