My advisor sold my Nvidia stock when I hired him, costing me $50,000 in potential profit. How do I deal with it?

By | December 18, 2023

Since December last year I have had a financial advisor, a certified financial planner (CFP). I find his advice super valuable, but I can’t get over the fact that he sold all my Nvidia stock when he took over as my CFP. I bought $20,000 worth of Nvidia when it was only $130 per share, which would have given me a profit of over $50,000. He told me not to worry too much about it because even though it was booming, it could have gone the other way. Do you have any suggestions on how to get over this? I still feel very frustrated even though I really like him as a CFP. I’m not sure what to do. How long should I give a CFP to demonstrate his/her value?”

– Curry

Your frustrations are understandable and you are certainly not alone. Investors – whether individuals or institutions – and their financial advisors differ every day about buying and selling decisions.

While it can be difficult to move past these feelings of frustration, there are some important things to keep in mind. A full review of these points can help you move forward with a new sense of confidence and a strengthened partnership with your advisor.

Need help finding a Financial Advisor? You can find an advisor today with SmartAsset’s free matching tool.

Evaluate decisions in the context of your plan

First, I encourage you to consider whether the decision to sell your Nvidia stock was made with your best interests in mind. Your broader financial plan, which should emphasize your long-term goals, will often determine what is in your best interests. Unfortunately, what seems to make the most sense in the short term is not always what is best for the long term.

Based on the information provided, it appears that this could be the case. More importantly, it seems like you trust that your advisor made the decision with your best interests and long-term goals in mind – and that’s great.

That said, it can be helpful to better understand what happened after your advisor sold the stock. Did he redistribute the proceeds in a way that balanced your portfolio so that it was more in line with the agreed plan? By validating whether this is the case, you can rest assured that he was, in fact, acting in your best interests. (A financial advisor can help you create a long-term plan for your investment portfolio. Find an advisor today.)

Think about the reasons why you hired your advisor

A financial advisor meets with a client.A financial advisor meets with a client.

A financial advisor meets with a client.

As with the previous point, it can be helpful to think about why you hired your advisor in the first place. Often, individuals hire advisors to help them achieve their long-term goals in a holistic manner. The real value comes not from outperforming the market in the short term, but from helping you create a plan that allows you to execute complex planning items that you might not otherwise have been able to execute on your own. Investments are only part of the picture, although they are admittedly the most tangible and resonant for customers.

As you think about the Nvidia situation, also think about the other parts of your plan that you and your advisor worked on together. Did he implement parts of your plan that you would have found difficult to implement yourself? Has he managed your overall portfolio effectively despite the volatility the market has experienced since you first hired him? While you were in the early stages of your partnership, did he get you on the right track to achieving the long-term goals you set?

When it comes to investments, keep in mind that advisors generally build diversified portfolios intended to match your long-term goals, and are unlikely to successfully time every trade in your account. As mentioned, this targeted approach – where we do not beat the market in the short term – is often the main motivation for hiring an advisor.

At the heart of a diversified portfolio is strategic asset allocation, an approach that calls for finding the right balance between different asset classes and rebalancing them periodically to stay within these target thresholds. Research has shown that strategic decisions about asset allocation determine approximately 90% of returns in the long term. This means that tactical moves, such as market timing, have little impact on achieving long-term goals. (And if you need help with your asset allocation, consider talking to a financial advisor.)

Importance of communication

Perhaps the most important part to evaluate is the communication you have with your advisor. Trust is most effectively established and maintained through healthy communication practices. How would you characterize the level of transparency in your communication with your advisor?

From your perspective, it can be helpful to understand the advisor’s decision-making process – both for investment and financial planning moves – and the rationale underlying decisions such as when to sell a stock.

From the advisor’s perspective, it is critical that they understand how you prefer to be informed about investment and planning decisions so that nothing is lost in translation as they implement a plan to help you achieve your goals. You may also want to be more involved in these decisions, which is perfectly acceptable. Just make sure that you express this wish to your advisor, and make sure that he is open to closer cooperation in this way.

Changing course can be challenging if a transparent, two-way dialogue is not established early, especially if trust is damaged. Therefore, in any client-advisor relationship, be sure to communicate your communication preferences early and ensure you understand in advance how your advisor makes decisions on both investment and planning items. This should facilitate open conversations and increase trust. (And if you want to find a new advisor, consider using SmartAsset’s free tool to match one.)

Focus on the future

A financial advisor meets with a married couple about their long-term financial plan.A financial advisor meets with a married couple about their long-term financial plan.

A financial advisor meets with a married couple about their long-term financial plan.

Decisions are of course easiest to assess afterwards. What may seem like a bad decision to sell Nvidia today could be a good move to better align your overall portfolio with your investment objectives (including required returns and risk tolerance) and your broader financial plan. That level of holistic alignment between investments and planning could pay you dividends over decades, potentially more than the short-term gain from a stock sale, although that’s hard for anyone to estimate these days.

It is also important to realize that similar situations may arise in the future. There will always be high-flying investment opportunities that your advisor may miss, or that may not fit perfectly into your own portfolio. Establishing standards for how you expect to communicate and understand the thought process when these times arise will prepare you and your advisor for a successful mutual relationship.

In short

Moving on after an advisor misses an opportunity to reap larger profits from an investment is incredibly difficult, even if the advisor had a good reason to do so. As a client, always understand the “why” behind your advisor’s decisions so you can trust that the decision was made with your best interests (and long-term goals) in mind. Ensuring that you are informed is also the advisor’s responsibility. So keep him honest and make sure he keeps his end of the bargain.

Tips for finding a financial advisor

  • Finding a financial advisor does not have to be difficult. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your area, and you can have a free introductory meeting with your advisors to decide which one you think is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Jeremy Suschak, CFP®, is a SmartAsset financial planning columnist who answers reader questions about personal finance topics. Do you have a question that you would like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Jeremy is a financial advisor and head of business development at DBR & CO. He received compensation for this article. Additional author resources can be found at dbroot.com.

Please note that Jeremy is not a participant in the SmartAdvisor Match platform and has received compensation for this article. Some reader-submitted questions have been edited for clarity or brevity.

Photo credit: ©iStock.com/FG Trade, ©iStock.com/Ridofranz

The post Ask an Advisor: My Advisor Sold My Nvidia Stock When I Hired Him, Costing Me $50,000 in Potential Profit. How do I deal with it? first appeared on SmartReads by SmartAsset.

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