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Signs your financial advisor may not be working in your interest
12th May, 2026 12:01 PM
Hiring a financial advisor feels like a smart move. Someone is watching your money, flagging opportunities, and helping you plan towards a future that does not arrive without a strategy.
The relationship works well when both of you want the same thing. The trouble is that the financial advisory industry is not always set up to guarantee that.
In Kenya, investment advisors are required to hold a licence from the Capital Markets Authority (CMA), the regulatory body that oversees the country’s capital markets.
As per the regulations, before any advice is rendered, an advisor must disclose any conflict of interest in writing. But regulations only protect you if you know what to look for. These are the signs that the person managing your money may be working more for their own wallet than yours.
They earn only when you buy something
The most immediate red flag is an advisor who operates entirely on commission, meaning they make nothing unless you purchase a financial product.
The problem is not the model itself. The problem is the incentive it quietly creates.
Research from Duke University’s Fuqua School of Business found that commission structures push advisors towards recommending products that may not suit a client’s actual risk profile.
As Professor Simon Gervais, who led the study, observed: “when they sell ‘specialised’ products, they receive a commission.” In that kind of arrangement, the advisor’s best financial decision and your best financial decision are not always the same thing.
A corroborating study published in Economics Letters reached similar conclusions, finding that altering commission rates had significant effects on what advisors recommended – evidence that the link between pay structure and advice quality is not merely theoretical.
A genuine advisor should sometimes tell you to do nothing, to wait, or to hold what you already have.
If every meeting ends with a product recommendation and a form to sign, that pattern deserves a closer look.
Reporting is vague and your questions go unanswered
A trustworthy advisor keeps you informed.
At any point, you should be able to understand what your money is doing, what it is costing you in fees, and whether you are on track for the goals you agreed on when you started working together.
If your quarterly statements arrive packed with figures and no clear explanation, or your advisor meets your questions with jargon and deflection, that is a problem.
Vague reporting is one of the most common ways a poorly performing portfolio stays hidden.
Kenya’s Capital Markets (Licensing Requirements) (General) Regulations are specific on this: every investment advisory contract must be in writing and must clearly state the services being offered, the fees to be charged, and the formula used to calculate them.
If your advisor has never produced such a document, that is not just a concern; it is a regulatory breach you are entitled to raise.
How to evaluate the person handling your money
Knowing what to ask protects you before things go wrong.
Before committing to any advisor, find out how they are compensated. Ask plainly: do you earn a commission on the products you recommend, or is your fee independent of what I buy?
Cross-check their name on the CMA’s publicly available register of licensed intermediaries at cma.or.ke. If they do not appear on that list, stop there.
Beyond licensing, pay attention to how they communicate. A good advisor explains trade-offs plainly, offers you options and tells you honestly when a product does not match your situation.
They do not rush you towards a decision, and they do not become difficult to reach after a sale closes.
Your money should be growing, and the person managing it should be able to show you exactly how and at what cost. If they consistently avoid that conversation, it may be time to find someone who will not.
