How to Switch Financial Advisors

There are a few telltale signs that mean it may be time to find a new financial advisor, like poor communication, weak portfolio performance and a lack of attentiveness to changing circumstances. Or maybe you’re just ready for a change. Either way, it’s important to do some research before jumping ship.

Doing an online search, talking with several advisors or firms or getting referrals from friends and family are good ways to start the research process as you seek out new a financial advisor.

Things to consider when changing financial advisors:

• Type of advisor you’d like to have (i.e., actual person, online service, local)
• Advisor’s specialty or focus (i.e., banking, retirement, investments, estate planning, tax planning)
• Kind of firm you’d feel most comfortable working with (i.e., independent, larger corporation, banking institution)
• What the fee structure looks like
• Which advisor credentials best fit your needs

Review Your Goals

Once you’ve decided to switch financial advisors, review your financial goals, current financial plan and overall investment strategy. Knowing where you are and where you’d like to be will help as you transition to your new advisor. Take a look at your financial plan, retirement needs and any life changes that may have recently happened or may be coming. You’ll have a fresh perspective and clearer idea of what you’d like to achieve going forward. Consider the driving reason behind the switch, which can help you focus in on some new goals or changes you’d like to make in your overall strategy. In this case, the “why” can help drive the “how”. 

Choose a New Financial Advisor First

After deciding you are going to change financial advisors, the transition will be a lot smoother if you have already hired a new advisor. They can give you advice during the transition period and help facilitate moving your assets, account information and investments. Since he or she will be helping you set up the next phase of your wealth management, they should also have your best interest in mind as these items are being transferred.

From there, you can have an open and up-front conversation with your current advisor about moving your accounts. Staying positive will help make leaving your financial advisor smoother and future communication less awkward. This will be especially important as you review your contract or Letter of Engagement with your current advisor.  

Consider the Costs and Tax Implications of Switching Financial Advisors

When switching financial advisors, be ready to discuss fees and costs, timelines, changes to assets or accounts, tax-related issues, the overall process and how much paperwork will be involved. In some cases, you may even need to start completely over with your accounts, if some items don’t transfer or need to be cashed out, depending on what the terms are in your current investment mix. You’ll also need to be ready to make new decisions about your asset allocation and short- or long-term strategies.

Questions to consider:

• Is there a termination fee and, if so, how much is it?
• Will I have to sell assets as part of the transfer?
• Will I incur capital gains taxes?
• Are the fees reasonable? Keep in mind things like the internal expenses of the underlying investments, the costs of trading and commissions, and estimated taxes.

Ready for a Change?

If you’re looking to make a change, contact a Farm Bureau advisor to talk about your financial planning and investment options.