No. Friends, family, co-workers, or neighbors are not reliable sources for financial advisor recommendations. They don’t have a good basis on which to judge whether their financial advisor is good or whether the fees charged are reasonable.
According to a study, the top reason clients leave a financial advisor is the advisor doesn’t return phone calls in a timely manner. The number 3 reason is the advisor isn’t proactive in initiating contacts and the number 4 reason is the advisor doesn’t return emails in a timely manner. Quality of advice and reasonable fees are way down the list of people’s top concerns. If you ask friends, family, co-workers, or neighbors for recommendations, chances are you will get someone who returns phone calls and emails fast and who initiates contacts proactively. Chances are the fees charged are exorbitant, but they just don’t know it. Chances are slim to none you will get a good financial advisor at a reasonable fee.
Friends, family, or neighbors are also sources of some of the worst offenses in financial product sales. When someone works in financial product sales, their friends, family, and neighbors become easy targets for making a commission. Many people have horror stories of buying the worst products from a friend, someone they went to college with, the dad of their kid’s friend, or even someone in the family.