Six Advisor Warning Signs That Deserve a Closer Look

A portfolio can look healthy on a statement and still be hard to judge. Performance may be compared with the wrong benchmark, fees may be missing from the figures, or a complicated mix of investments may hide how much risk you’re taking. These details matter because a weak or unsuitable portfolio can affect a household’s financial future, especially when there’s little room to absorb losses.

Portfolio reviews can reveal problems that aren’t obvious from a balance or a single return figure. Here are six warning signs to examine with your advisor, along with questions that can help you understand what’s happening.

1. The benchmark doesn’t match your portfolio

A return figure needs context. If an advisor says your investments gained 10% over the past year, that number alone doesn’t show whether the portfolio performed well. If an appropriate comparison gained 20% over the same period, the result looks very different. A dollar gain—such as $21,287—also tells you little without knowing the starting balance, the period, and how the investments performed relative to a suitable benchmark.

The benchmark should reflect the portfolio’s mix. For example, a portfolio with 80% stocks and 20% fixed income should be compared with a benchmark using the same proportions. Comparing it with one that holds 60% stocks and 40% bonds could make the portfolio’s performance look stronger, since bonds typically have lower returns than stocks.

Ask what benchmark is being used and how its mix compares with yours. This check can be especially useful when a portfolio holds many different or less familiar investments and the right comparison isn’t immediately clear.

2. Returns are shown before fees

Your take-home investment return is the amount left after fees. A performance figure that excludes fees doesn’t tell you what your money actually earned. Annual performance reports are required to show annualized returns after fees, but other materials—such as emails, presentations or quarterly reviews—may include figures before fees instead.

Look for a note explaining whether fees have been deducted. If you see only before-fee returns, ask for the after-fee figure too. It’s reasonable to expect both numbers to be identified clearly, so you can compare performance using the amount that reflects what you paid.

3. An account move makes past performance hard to see

When investments move to a new account, the old account’s performance may not appear in the new account record. The move may have a valid reason, but it can also make poor results harder to spot. One review described an account where two investments had fallen sharply; after they were sold and the money transferred, their history no longer showed in the new account.

If your investments have been moved, ask why, and request the performance history for the closed account. Review the holdings that were sold as well as the results they produced. A new account number shouldn’t prevent you from understanding what happened to the money before the transfer.

4. The fee summary leaves out fund costs

A regular fee statement is useful, but it may not include every cost. In particular, mutual fund management expense ratios, or MERs, can be built into the fund and left out of the advisor’s charge summary. That can make the total cost of a portfolio look lower than it is.

Finding the MER for each fund and calculating a portfolio-wide weighted average can take some work. The source says that full mutual fund fee disclosure is set to change in 2027, when the Charges and Compensation Report will include all fees, including MERs. Until then, check whether the figures in a report or conversation include fund costs. Informal updates may not show the full amount, even when a formal report does.

Ask for the total cost of owning the portfolio, including both the advisor’s charges and the expenses built into its funds. The source links to [a description of total cost reporting](https://www.getsmarteraboutmoney.ca/learning-path/rules-and-regulations/what-is-total-cost-reporting-and-how-it-will-work/).

5. Alternative assets add risk and restrictions

Private equity, private debt and hedge funds can be harder to assess than mutual funds and exchange-traded funds. Their disclosures may not give a clear picture of what they own, losses tied to failed businesses or loans, or how much money is held in cash. Some also restrict when investors can withdraw their money. That can make access uncertain when a household needs funds.

An advisor may describe private equity as a source of higher returns or as a way to add investments that behave differently from stocks and bonds. Neither outcome is assured. The source says private equity funds launched after 2005 have, in aggregate, performed no better than the stock market, and that some have done much worse. It also points to concerns about whether private equity is always as independent of traditional assets as its advocates suggest.

Before accepting a complex fund, ask what it holds, what losses it has experienced, how withdrawals work, and what evidence supports the role it is meant to play in your portfolio. The source also links to [a discussion of private market risks](https://rpc.cfainstitute.org/blogs/enterprising-investor/2025/private-markets-why-retail-investors-should-stay-away), [questions about private equity performance](https://rpc.cfainstitute.org/blogs/enterprising-investor/2020/myths-of-private-equity-performance-part-iii) and [a comparison of returns](https://rpc.cfainstitute.org/blogs/enterprising-investor/2021/myths-of-private-equity-performance-part-iv).

6. The portfolio is too complicated to explain

A long list of holdings, funds that combine stocks and bonds, and hard-to-classify assets such as gold, farmland, private equity or crypto can leave you unsure what you own. When the portfolio is difficult to follow, it’s also harder to judge its risk, make sense of performance, or ask specific questions.

Ask your advisor to explain each holding in plain language and show how the pieces fit together. If your statement leaves you overwhelmed, request a clearer account of your investments, their costs and their role. A portfolio should be understandable enough for you to discuss its risks and results with confidence.

Advisors can help many people, and there are good ones. But clients still need clear explanations and complete information. Start with direct questions about benchmarks, after-fee returns, closed accounts, total fees, withdrawal limits and portfolio complexity; the answers can show whether you understand what your money is doing.

Photo by Milada Vigerova on Unsplash.