Making the decision to leave your financial advisor can be a big one. After all, you’ve entrusted them with your financial well-being, and you may not be sure if it’s time to make a change. However, there are several signs that it might be time to move on.
4 Signs It’s Time to Fire Your Financial Advisor
- Your Financial Advisor Ignores You: Communication is key in any relationship, and this is especially true when it comes to your financial advisor. If your advisor is not returning your calls or emails, or if they take too long to get back to you, it may be a sign that they are not taking your needs seriously.
- Your Financial Advisor Talks at You, Not With You: A good financial advisor will take the time to listen to your goals and concerns. They will then work with you to develop a financial plan that meets your needs. If your advisor is simply telling you what to do without taking your input into account, it may be time to find someone else.
- Your Investments Are Too Expensive: One of the quickest ways to see your returns diminish is to pay too much in fees and expenses. While it’s the financial advisor’s job to match your investments with your goals and expectations, they should also be keeping an eye on expenses. You don’t want to end up in a situation where your advisor is steering you toward investments with a hefty commission, nor do you want to be paying an excessive amount for a fund when there is a similar investment available for less.
- You Don’t Feel Comfortable or Confident: Ultimately, the most important factor in deciding whether or not to leave your financial advisor is your own gut feeling. If you don’t feel comfortable or confident with your current advisor, it’s probably time to move on.
The Smart Way to Switch Financial Advisors
If you’ve decided to leave your financial advisor, it’s important to do so in a smart way. Here are a few tips:
- Do your research: Before you switch advisors, take some time to research your options. Talk to friends and family for recommendations, and read online reviews.
- Interview potential advisors: Once you’ve narrowed down your list of potential advisors, interview them to get a sense of their personality and investment philosophy.
- Make sure the new advisor is a good fit: It’s important to choose an advisor who you feel comfortable with and who understands your goals.
- Transfer your accounts: Once you’ve chosen a new advisor, you’ll need to transfer your accounts. This can be a complex process, so it’s important to work with your new advisor to make sure it’s done correctly.
FAQs
- How much does it cost to switch financial advisors? The cost of switching financial advisors can vary depending on the advisor and the complexity of your portfolio. However, you can expect to pay a few hundred dollars in fees.
- What should I do with my old financial advisor? Once you’ve switched advisors, you’ll need to close your account with your old advisor. You can do this by contacting them directly.
- How long does it take to switch financial advisors? The process of switching financial advisors can take a few weeks or even a few months. This will depend on the complexity of your portfolio and how quickly your old advisor can transfer your accounts.
The Bottom Line
Leaving your financial advisor can be a big decision, but it’s important to do what’s right for you. If you’re not happy with your current advisor, don’t be afraid to make a change. By following the tips above, you can make the transition to a new advisor as smooth as possible.
Additional Resources
- Investopedia’s Guide to Hiring a Financial Advisor: https://www.investopedia.com/personal-finance/how-to-choose-financial-advisor/
- The National Association of Personal Financial Advisors: https://www.napfa.org/
- The Financial Industry Regulatory Authority (FINRA): https://www.finra.org/
Deciding when to leave your financial advisor is a personal decision. There is no right or wrong answer, and the best choice for you will depend on your individual circumstances. However, by considering the factors discussed in this article, you can make an informed decision about whether or not it’s time to move on.
Collect Your Investment Records
It is legally required of your doctor to provide copies of your medical records to you if you decide to leave them. Good news: A federal regulation mandates that your current advisor or broker transfer the historical records of all of your assets to your new advisor. However, what about your investment broker or financial advisor?
Although advisors must transfer this data, it’s advisable to obtain a copy of the transaction history prior to requesting the transfer. In the event that the transfer is unsuccessful, you will have the records on file.
The majority of investment firms allow investors to view their entire transaction history online via a password-protected account. It is advisable that you download the data prior to losing access to the website.
Don’t forget to copy the documentation showing the taxable securities’ cost basis when you are copying your investment accounts. The asset’s price after stock splits, dividends, and return-of-capital distributions is known as the cost basis. You must fill out IRS Schedule D with the necessary data in order to report taxable gains.
Read Your Contract’s Fine Print
You most likely signed a management contract when you first started working with your current advisor. Usually, these agreements contain a section that specifies how to formally end the advisor-investor relationship.
Most of the time, all it takes to end the contract is to give your advisor a signed letter. There are times when you might have to pay a termination fee. Go over all those unsavory details before firing your current advisor.