You set out on your financial journey with a specific vision in mind, and you thought you had a financial advisor who would be with you the whole way. Whether the market was bull or bear, there was one person (or team) you knew had your back.

Then it hits you—after many years, suddenly you and your advisor aren’t on the same page anymore. Is it you…or them?

Perhaps your investment priorities have changed. You are now interested in investing in one industry over another, or maybe you want a different kind of fund outside your advisor’s expertise.

Oftentimes, investment strategy changes with age: in your twenties, you wanted a portfolio that is more aggressive, but a decade on, you see the value in a slow and steady approach. Or perhaps it’s a “clean and clear” change you want by divesting and reinvesting in fossil-fuel-free options. It may even be more basic: you only want to invest in green initiatives or are interested in a more socially-equitable focus.

A good financial advisor will always meet with you discuss your questions and curiosity about a new financial planning or investment management strategy. He or she may have a strong reason for maintaining a specific strategy for you, but they should clearly be able to point to how and why it will benefit you, not them.

There may be more obvious warning signs that it’s time to leave.

Perhaps you’ve seen the signs—an inability to get your investment team members on the phone, or asking questions that your advisor doesn’t seem willing to answer. Maybe you have trouble getting anything in writing, from answers about fees and account management to updates on your portfolio and how it’s performing.

Whatever the reasons, a change is in order and you have no idea now how to break up with your financial advisor.

There are a few fundamental steps you can take to make sure the transition is as painless as possible, once you find a new advisor to suit your changing needs.

Read the Fine Print

Take a look at your management contract with the current advisor. There should be a clause included describing how to formally sever the relationship. There may be termination fees involved, so read carefully.  Ask if your investments are locked down. Some contracts can tie your assets up for a certain period of time.  Cashing these out early could incur penalties.

Transfer of History and Accounts

The good news, thanks to a 2011 ruling, is that your current advisor is required to transfer the historical records of all your securities to the new advisor.  Once you find a new advisor, the transfer itself can be performed with an authorization form. Most of the switch can be made with your assets transferring “in kind,” or without rolling them over. This is ideal, because the IRS has limits about the number of rollovers that can be performed in a year, and exceeding that limit can have tax consequences.

When providing a list of all accounts needing to be transferred, double check all your details are correct. Multiple account transfers can be slowed by rejections when numbers don’t correspond, or trust documents aren’t provided.

Follow Through

It doesn’t stop there, however. While you can leave it to your new advisor to trigger the transfer from their end, get proof of rescission your former advisor has severed his or her authority over your accounts If you’re against the idea of a face-to-face meeting with the former advisor, making a phone call to the old advisor during the transfer process can help facilitate matters. After all, trading should stop during the transition, and while no one likes having to discuss why things didn’t work out, it can help you both to understand where the holes appeared in the relationship so they can be avoided in the future.

There are all kinds of reasons people grow unhappy with their current financial advising team, whether it’s under performance, a change in attitudes, or a shift in focus. It doesn’t have to be a painful move from one advisor to another, and with a little up front knowledge, you can make the transition as smooth as possible. From there, it’s onward and upward.


NEILL YELVERTON IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

 

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