People hire financial advisors for various purposes. Whatever your personal reason, it’s important that you’re getting what you need out of the relationship with an advisor, and that the relationship is serving the intended purpose for your financial future. If your main priorities are not being met, it may be time to have a conversation with your advisor. If things don’t change after that or you don’t feel heard, it may be time to explore how to leave your financial advisor
In this article, we’ll discuss how to break up with financial advisors and get a fresh start, as well as the five key factors to consider when it comes to leaving your advisor. We’ll also offer a list of steps to help guide you through the process.
5 Reasons To Dump Your Broker Or Financial Advisor
Whether you want to reduce the stocks in your portfolio so you can sleep at night or make sure you have enough money saved for retirement, your financial advisor should help you work toward those objectives. They should also act as a sounding board for your financial questions, no matter how small.
If you’re feeling uncertain about your financial advisor, here are a few red flags to watch for that indicate you may need to dump your broker or advisor. However, don’t be too hasty to initiate a breakup! Reach out to your financial advisor for a conversation to see if you can rectify your issues first.
1. Poor Communication
If you’re wondering, “Is leaving my financial advisor the right move?” poor communication may be the reason. Your advisor should be reaching out to you regularly to stay up to date on your financial objectives and ensure your needs are being met. They should also be letting you know if it is a good time to rebalance your portfolio, if you might be able to take advantage of any tax-savings opportunities, or if there are any tax law changes that may affect your personal situation.
For example, due to recent proposed federal tax law changes, our firm is currently reaching out to clients who are eligible for a backdoor Roth IRA (a strategy for high-income taxpayers that may be eliminated in 2022).
Before you go too far down the road of finding out how to get rid of your financial advisor, keep in mind that communication in your relationship goes both ways. Your advisor may not be aware of financial changes unless you let them know. You should always feel comfortable reaching out to your advisor to ask questions anytime without judgment, now matter how small.
2. Lack Of Transparency
Asking yourself whether your advisor is transparent about their fees and their motivations is an important part of knowing how to leave your financial advisor, if that is indeed the right route for you to take. Sometimes, when an advisor suggests you make a change to your portfolio, it generates a commission for them as a result. These decisions may not always be in your best interest.
For example, when the market fluctuates or drops significantly, some advisors or brokers will reach out and suggest you buy an annuity that offers a guarantee. You may be tempted to act out of fear, but keep in mind that the costs associated with these commission-based products can be high and you may be locked in for an extended period of time. This is why you always need to know why your advisor is reaching out to you to make a change, and the costs associated with that change.
3. Financial Philosophies That Clash With Your Own
Many financial advisors only focus on managing your investments and don’t actually create a plan around the investment advice they provide to you. If you believe in taking a comprehensive approach to financial planning, tax planning, and investments, you may want to look into how to leave your financial advisor.
When you have concerns about whether you’ll have enough money to retire, or want to understand which accounts are best to save your money in based on your unique circumstances, you should seek out a firm that looks at the big picture and can provide advice on financial planning and taxes. Ultimately, you could end up paying less to get all of your financial advice from an advisor who takes a comprehensive approach.
4. Lack Of Expertise In The Areas You Need
Knowing how to fire a financial advisor should not be an emotional decision. It’s important to rationally consider your needs and whether your advisor is meeting those needs with the services they provide. For example, if you require help with savings and investments but your advisor is only offering guidance on insurance, this could be a red flag.
If serious tax chops are important to you, look for a firm with Certified Public Accountants on deck. It’s also a wise move to look for Certified Financial Planners for your goal setting and planning needs.
5. Stagnant Advice
As the saying goes, “The only constant in life is change.” If you started working with an advisor when you had a straightforward financial situation, then you suddenly inherited a significant amount of money or decided to sell a business, your needs could change drastically.
Your financial advisor’s advice should evolve along with the complexity of your financial circumstances. If it feels like you’re in a rut, it might be time to explore how to break up with your financial advisor.
How To Leave Your Financial Advisor: 3 Steps
“Leaving my financial advisor would be too much work!” Perhaps you have communicated your expectations to your advisor and you’re still unhappy and are looking for a fresh start. If you’re worried the process of how to get rid of your financial advisor might be a headache or you might incur some unnecessary fees, here are three steps for how to fire your financial advisor with grace. Keep in mind that the specifics may vary depending on your firm.
1. Check your contract.
Always read the fine print. For example, if your financial advisor has sold you commission-based mutual funds, an annuity or an insurance product, you may have paid a high upfront commission. It could be in your best interest to stick with your current advisor until you get your money’s worth in returns for the commission or find an advisor that will work with the products you have and develop a strategy to minimize transition costs. Similar situations often occur with insurance contracts, so be sure to check those, too, or you could risk suffering costly tax implications.
At Curio Wealth, we don’t sell products or require long-term commitments. We are confident in the services we provide and want our clients to have the freedom to make a change if we do not meet their expectations. All accounts we open on our clients’ behalf are in their names.
2. Choose a new advisor.
Knowing how to leave your financial advisor hinges greatly on understanding what to look for in a new advisor. It’s crucial that you understand the differences between a broker vs. fiduciary, for example. When you’re clear on your requirements, you can begin interviewing candidates.
Once you’ve selected a new financial advisor, ask them if they can complete the paperwork for you to transition your accounts from your old firm to your new one. They can even have a chat with your former advisor to let them know you’ve made a change if you don’t wish to have the conversation yourself.
3. Obtain your records, and close your account.
Before you make the final decision to leave your advisor, make sure you have copies of important documents and the necessary account and cost basis information. Your new advisor may be able to transfer your account in-kind, but would need an account number and account type along with a statement that is less than 90 days old.
Ensure that your new advisor has all the information necessary to make informed decisions. Making a change just to make a change could generate unnecessary commissions or even a high and unexpected tax bill for you.
The Curio Wealth Advantage
At Curio Wealth, we’re committed to developing long-term relationships with our clients based on mutual respect, exceptional advice, and high-quality, personalized service. Our team of fiduciary financial advisors is legally required to put your best interests first and will always ask you thoughtful questions to understand your financial goals deeply. We welcome your questions, too.
If you’re looking for a financial firm that is proud to help improve the lives of our clients and their families, many of whom we’ve had relationships with for over 20 years, schedule a call with us today.
