Finding a Better Fit

How to hire a new financial advisor that meets your needs.

Whether it is business or personal, sometimes relationships don’t work out. In many cases, one or both parties’ needs are no longer being met, or maybe it just wasn’t the right fit from the beginning.

When it comes to financial and retirement planning, this can be particularly true because goals and objectives will typically change over time, and the advisor you have worked with for a long time might not be the right one to lead you financially forward through the next chapters of your life.

So how do you decide whether you should continue your current relationship or move on to someone who is a better fit for you?

When to Consider a Change

There are several situations that might cause you to start looking for a new financial advisor, such as when: 

your current advisor is nearing retirement, moving out of the area, or going to a different firm that you don’t want to do business with;

you have more of a “transactional” relationship with your current advisor (such as just buying and selling stocks and mutual funds), but you now need more comprehensive and sophisticated planning;

the current advisor isn’t staying up-to-date with changes in the industry, including financial laws and regulations as well as new strategies that could enhance your portfolio or future retirement income generation;

the relationship is just not a good fit.

Changing Financial Advisors

Depending on the type of relationship you have with your current financial professional, it can be difficult to move your business elsewhere—especially if you haven’t had a bad relationship.

In many ways, parting ways with a financial advisor is like ending other types of relationships. With that in mind, be sure that you talk to your current advisor and possibly try to work things out.

For instance, in some cases, an advisor might not be aware that their staff isn’t providing good service or is being unfriendly to clients. Oftentimes, advisors are focused on managing financial plans and portfolios for their clients, so they may not see what is happening in the administrative areas of their business. Therefore, by bringing up the issue and resolving the situation, the relationship with your current advisor could improve, and perhaps even move forward. 

In other instances, though, it could still be time to make a change. So if you determine it is necessary to move on, how exactly do you “break up” with your current financial advisor and find a better fit for you? Here are some important steps that you should consider, in order to make the switch more seamless and amiable:

Let the Advisor Know Why You’re Moving Your Accounts

If you and your current financial advisor butt heads, then it’s probably obvious why you are moving your accounts. However, if you’ve had an “okay” relationship but it’s simply time for a change, or they’re just not meeting your financial needs anymore, then it’s important to let them know why you are going somewhere else.

Moving forward with no explanation at all, or “ghosting” the advisor, is not typically the best way to handle the move. This is true even if your reasons for leaving are due to a negative experience. In fact, getting tough feedback is often better than receiving no explanation at all.

Having an open line of communication is critical when it comes to staying on good terms, even if you don’t do business with each other anymore. In some instances, providing this information might help the advisor improve their overall processes, and others may be able to benefit from your feedback.

Have a Written Termination Agreement

Similar to signing a lease on a rental property, there are some financial advisors or firms that require at least 30 days’ notice to terminate your business with them. This is often the case to resolve fees and invoices. But even if it’s not required, having a termination agreement in writing for your records is always a good idea. Sometimes, letters of engagement (or certain verbiage in account forms) will detail the termination process.

Look for Any Exit Fees

Many investment and financial advisory firms charge exit or termination fees when a client closes their account. This typically covers the cost of transferring assets or custodial reporting. Depending on the specific situation, though, you may be able to have this fee waived or have your new advisor pick up the tab.

Obtain (or Gain Access to) Copies of Your Financial Records 

Today, most banks and financial firms allow online access to customer statements and other information such as the cost basis on trades, gains and losses, activity in the account, and other pertinent details. Before closing out your business with any financial advisor or firm, make sure that you have the most recent copies of all your information for your records. You will typically also have to forward certain information to your new financial advisor.

Revoke Trading Authority

If you’ve given your current advisor any type of trading authority in your accounts (and/or powers of attorney), you should revoke these agreements. Oftentimes, your new advisor can take care of this process for you via a standard transfer form.

Your New Advisor Checklist

While the process of deciding whether or not to leave your current advisor is important, it is also essential that you make a wise choice before committing to a new financial professional. With that in mind, make sure that you obtain pertinent information from them, such as:

Do they have professional certifications?

Are they a fiduciary?

What other professional licenses and/or designations have they earned?

How long have they been working in the financial-services industry?

What area (if any) do they specialize in—retirement income planning, wealth management, etc.?

What percentage of their client base is LGBTQ (if you think that will help them have a better understanding of you and your situation)?

Have they had any disciplinary actions taken against them?

How are they compensated (i.e., by a commission on products sold, a flat advisory fee, or a percentage of assets under management)?

It can also be helpful to contact some of the advisor’s clients and inquire about their experiences.

Are You Getting What You Need?

If you’re not getting the service and/or advice that you need from your current financial professional—or if you’re simply seeking someone who is a better fit for your needs—make sure that you do your homework to ensure a successful move.

In addition, it can be difficult to find financial and retirement professionals who are well-versed in the needs of—and the options that are available to—the LGBTQ community. But this may be an essential component of your comfort level with an advisor, and the key to receiving the proper advice. So be sure to factor in this component, as well.

This article appears in the November 2021 edition of OutSmart magazine.


Grace S. Yung

Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the September 2017 issue of Texas Monthly.
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