Breaking up is hard to do: How to leave your financial advisor | Berkshire Money ManagementBerkshire Money Management (2024)

If you’re ready to leave your financial advisor, all that’s technically required is to submit a signed letter terminating your contract. But if you want to avoid drama and side-step the red tape, it’s better to have a plan before breaking up with your money manager.

When to change financial advisors

If your current financial advisor is no longer a good fit for your needs, goals, life stage, or personality, it’s time for you to move on. If you’re experiencing any of the scenarios below, it might be time to change advisors.

It’s not you, it’s me

Are your financial goals, challenges, and needs the same as they were when you first met your financial advisor? Many people find that as they approach retirement, they have new questions and want more hands-on guidance from their financial advice partner. You may find that managing investments isn’t enough for you anymore.

You like your advisor and they haven’t done anything wrong, but it’s time for you to meet someone new. A good advisor should understand that they aren’t meeting your needs and that it’s better for you find a new partner who can.

The long-distance relationship

Maybe you’ve had a great relationship with your advisor in the city where you lived for many years. They’ve watched your kids grow up, helped you plan for college, and you thought that you would retire with them. Now, you’ve moved away to the Berkshires and they’re still in Manhattan. You miss your regular in-person meetings and find Zoom portfolio reviews and phone calls just aren’t the same. Perhaps your long-distance advisor hasn’t updated your financial plan to factor in your new hobbies, passions, and expenses. Maybe they have stopped returning your phone calls.

Long-distance relationships can be a drag if you’re not with the right partner. With more than 330,000 financial advisors in the U.S. alone, you’re likely to find an advisor closer to home who knows and understands your new community and how it impacts your financial plan. Someone close by who can meet you for an impromptu lunch or face-to-face conversation.

Ms./Mr./Mx. Always Right

Does everyone always agree with their advisor? Of course not! While you expect your financial advisor to give you objective advice and help you make smart decisions with your money, you should also expect them to listen to your concerns and help you make your ideas work.

You and your financial advisor should be on the same page more often than not. If you’re constantly butting heads with your advisor about investment strategy, spending and saving, personal values, or life goals, I suggest you find a new partner. The same advice applies if you can’t agree on Yankees vs. Red Sox.

Relationship red flags

Can you trust your financial advisor? Trust and communication are two of the most important aspects of a client-advisor relationship. If you don’t trust your advisor to act in your best interest or if they’re impossible to get in touch with, it may be time for a change.

Advisor relationship red flags include:

• You hide things from your advisor because you feel judged for your decisions.
• You don’t feel like they care about your hopes, dreams, and goals.
• When you call the office, you get an automated operator (to break up, press 0).
• Your advisor doesn’t address your concerns.
• You feel like you’re just another account number.
• Your advisor is never available to take your calls or meet with you.
• You feel your advisor isn’t being transparent with you.

If your advisor is showing you any of these red flags, there’s nothing to discuss. Pick a different advisor (and advising firm) ASAP.

I’m just not that into you

If you just don’t like your financial advisor, that’s ok, too. You don’t need to find an excuse to change advisors. This is an important relationship and it’s well worth taking the time to find someone you enjoy working with, even if that means conveying to your current advisor you’re just not that into them. It’s time to tell them you’re “going in a different direction.”

Is it difficult to leave a financial advisor?

No. Leaving a financial advisor takes just a few simple steps. The hardest part may be finding the courage to say goodbye.

What is the cost of changing financial advisors?

There may be some costs to changing advisors, but they vary from case to case and should be reviewed before making a change.

• Early surrender charges. Some financial products, such as variable annuities, have early surrender charges which can be quite prohibitive.
• Proprietary investments. An investment that is proprietary cannot be moved from firm to firm in the way that a share in a company can. Outside of Money Market funds, these proprietary investments are often a way to charge you extra fees and prevent you from leaving because you must sell them (and risk significant capital gains taxes) in order to change firms.
• Taxes. If you sell investments rather than transferring them, you may be subject to capital gains taxes.

Your new advisor should review with you the potential costs of changing financial advisors and create a plan to minimize losses. If changing advisors doesn’t make sense for you financially, a trustworthy fiduciary advisor will tell you to stay put.

How to “fire” your financial advisor

Firing your financial advisor is a simple process that can be made even simpler with the help of your new advisor.

4 steps for firing your financial advisor

1. Get out there. Take some time to identify some potential advisors who will meet your unique needs. Ask your friends, family, and colleagues if they work with anyone they would recommend. Search online for advisors who specialize in the topics you care about most.
2. Schedule some dates. Meet with at least 3 advisors before choosing your new financial partner. If you don’t find the right person or firm right away, keep looking! It’s worth taking the time to get this part right.
3. Make plans. You wouldn’t dump your roommate without a place to crash, so why fire your advisor when there’s nowhere for your money to go? I often advise clients to open their new accounts before notifying their old advisor, but recommend you consult with your new advisor on this topic. They will help you make the best decision for your circ*mstances.
4. Break the news. You can end your relationship with your advisor in whatever manner makes you are most comfortable, whether that’s over the phone, by email, via letter, or in person. Some offices may have rules dictating how services must be terminated. Often you will need to submit a letter documenting the change. If you shy away from conflict, your new advisor may be willing to handle the breakup for you. Just ask!

How to tell your financial advisor you’re moving on

There are many ways you can tell your advisor that you’re working with someone new. These are the most common:

1. The ghost
   Often times, you are not required to tell your old advisor that you are leaving. In the case where your advisor charges you based on the investments they manage for you, moving your investments essentially ends the relationship. Though this is a common practice, I don’t recommend this approach because no one likes to get ghosted. And there may be flat fees you pay to your advisor that you continue to be billed for if you don’t let them know you wish to end the relationship.
2. Drop a note
   Sending a letter or an email to your old advisor has the benefit of putting your notice in writing and gives you the opportunity to avoid any confrontation. I recommend this method if you don’t feel comfortable breaking the news to your advisor directly. In your letter or email, you have the chance to inquire about any termination fees or other costs for moving.
3. Face to face
   For those who would prefer the most direct approach, giving your old advisor a call or scheduling a meeting is a good option. This gives you the opportunity to talk through the situation, ask any questions, and thank them for their service and support over the years.

Remember that no one should ever apologize for making a decision they think is best for their family. Unless you’re leaving on bad terms, be sure to thank your advisor for the work they’ve done for you.

If you’re not sure what to say, your new advisor may have some suggestions for language to fit your own unique situation. For example, you may choose to say:

“Dear [Advisor first name], thank you for the time and work you and your firm have done for us over the years. At this time, we have decided to work with another firm who we feel is a better fit for us at this stage of our lives. We appreciate the guidance you’ve given us.”

Regardless of why you’re moving on, try to avoid criticizing your soon-to-be ex-advisor and instead focus on the positives of this change. Ask yourself, “Why am I coming to this new advisor?” rather than, “Why am I leaving the old one?” Here are a few more good examples of ways you can tell your financial advisor that you’re leaving:

• “My needs have changed and I require more than just money management. The services this new advisor offers are what we need now.”
• “I have decided to move to an advisor who will create a complete financial plan for me.”
• “This advisor understands my goals and concerns and has a plan for addressing them.”
• “I enjoy working with you and appreciate everything you’ve done for me, but I need to do what’s best for my family.”
• “We have decided to go in another direction.”

Find the right Berkshire financial advisor for you

What should an advisor bring to the table for a retiree? Mitch Anthony, who pioneered the concept of financial life planning, identified six key value propositions that planners can provide: education, partnership, objectivity, organization, proactivity, and accountability.

What makes an effective financial advisor?

Education

Educated investors don’t simply wing it. When deciding how much risk to take, they look first at how that decision could influence their ability to reach their goals. They make smarter decisions when they know what is happening in the markets, for better or worse. When they don’t know, they go with their gut—and they put their dreams at stake.

Partnership

Financial advisors do much more than manage your money. Advisors help clients identify what is truly important in life by leading longer, deeper conversations about family, hopes, and dreams. A good advisor wants to know what uplifts you and what worries you and works with you every step of the way to achieve your financial goals.

Objectivity

Advisors need to be objective. Fiduciary advisors are required to always act in their clients’ best interest and provide all relevant information needed to make the best decisions. The value of an objective advisor extends past fiduciary responsibilities – your advisor can provide a crucial outside perspective in situations where emotions threaten to knock you off track. For example, you might feel an emotional attachment to your family home in Lenox, but now that you’re an empty nester, the large property is holding you back from achieving your goal of retiring to Mexico. Your advisor should never dismiss your emotions but help walk you through the situation and see it from another angle so you can make the right decision for yourself.

Organization

Financial plans bring together a mess of documents and accounts, including investments, insurance, estate documents, taxes, and more. It can be hard to keep track! An effective financial advisor helps clients to organize their financial lives so both the client and advisor can get a clear view of where you stand and create a path to where you want to go.

Proactivity

Most financial advisors will be happy to help you answer your questions. The most effective advisors anticipate your questions – and your major life transitions – to help prepare for them well in advance. For example, a proactive financial advisor might reach out to you months before your Medicare enrollment date to share information, key dates, and offer support instead of waiting around for you to call for help.

Accountability

A plan is meaningless without implementation. An effective advisor partners with clients to set priorities and regularly reviews their progress with them, making changes as necessary. Some advisors are so committed to accountability that they will hold their clients’ feet to the fire (figuratively), hold their clients’ hands (literally), or even complete tasks themselves to make sure their clients’ financial plan is being put into action.

Hiring the right financial advisor can lead to a rewarding lifelong partnership, but I know it doesn’t always work out that way. If you’re not 100% satisfied with the service, attention, or care provided by your current advisor (or you don’t enjoymeeting with them), you owe it to yourself to find someone new.

Finding a new advisor doesn’t have to be scary. Take the time to find the financial advisor who fits your wants and needs, work with your new advisor to organize the move, and notify your old advisor. You’ll find it’s much easier than dumping your ex.

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