Investing
Zoe Team
5 min read
Firing a wealth advisor requires a clear, professional approach to ending the relationship.
Following a structured, five-step process helps ensure a smooth transition while protecting your financial interests.
Moving on allows you to find a new advisor who better aligns with your current financial goals and service expectations.
Ending a professional relationship can be uncomfortable, but following a clear, structured process can make the experience professional and efficient for both parties.
The first step is to confirm your decision, then clearly communicate your intent to terminate the partnership while requesting all necessary account transition documents.
It is highly recommended to vet and select a new fiduciary advisor before officially ending your current relationship to ensure your assets remain managed.
Once you’ve decided to fire your wealth advisor, you should follow five key steps.
Ending a relationship, no matter what kind, is never easy. It can be uncomfortable and, often, something people seek to avoid altogether. Once you have decided to fire your advisor, it’s best to just “pull off the band-aid,” so to speak.
Besides obvious cases such as negligence or fraud, your relationship with your advisor can end for several reasons. Regardless of the cause, here are some tips on how to go about firing your advisor.
The first (and most important) step in firing your advisor is to review your contract with them. This contract will contain a clause(s) explaining the exit process and any fees payable. These fees could relate to your annual fixed fees. For example, are you liable for the rest of the period? Can you pay a penalty to exit early? And even, what does it cost to transfer your investments? Some contracts make you liable for all of the annual fixed fees. Other agreements may allow you to pay a penalty to terminate the contract early. Once you know what steps you need to take and how much you will be charged, you can begin the process.
2. Make a Plan for The Future
If the relationship between you and your advisor doesn’t work out, it is time for you to create a new plan for your wealth and investments.
The first option is to start managing your own accounts. While some people prefer to do this, problems can arise. Most people lack wealth advisors’ expertise to manage market uncertainty, estate planning, retirement planning, and tax strategies.
The second option is to hire a new advisor. The benefit of this is that a financial advisor can help manage the entire process of firing your current advisor and transferring your portfolio, so all you have to worry about is finding the right advisor for you.
Regardless of your decision, you must start preparing before firing your current advisor. If you are doing it alone, it’s a good idea to start by organizing all the paperwork necessary to move your investments to a new brokerage. If you hire a new advisor, they can manage this process for you.
Custodians are legally required to transfer their client’s security historical records. If the client is transferring taxable investment accounts, they should also keep personal records of the cost basis of these securities. This amount will be included in their transferred accounts, but it never hurts for them to have it in their own records. This information is required when filing income taxes.
This is the most challenging part. There are many ways to deliver the news. You can write a personal note to them, email them, or call them—whatever you feel most comfortable doing. No matter what method you choose, remember to specify an end date.
Do your best to leave your emotions at the door. This is a business decision, and no matter how nice your advisor is, you are leaving for a reason. Remind yourself of that reason and keep any communications as brief and firm as possible.
If you go the call route, be prepared for some pushback. They might try to convince you to stay, so the key is to let them know that the move is going to happen and that you are just informing them of the decision that you have already made.
Example of an email:
“Hi (Advisors Name)
I want to thank you and express my appreciation for all your help over the past few years with my personal finances. At this time, I’ve decided to move my accounts to another advisor that I feel is a better fit for me as of (end-date). I wanted to notify you as you should be receiving the transfer requests shortly.
I wish you all the best.
Kind regards,
(Your name)”
Change is often uncomfortable, but remember why you thought of firing your advisor in the first place. It’s better to take action than to complain for decades or, worse, be concerned about who is handling your wealth.
If you are in the process of looking for a new advisor, have a look at our blog, How To Interview a Financial Advisor so that you can make the right choice.
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