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Changing Financial Advisors: How to Make the Switch

Your relationship with your financial advisor is an important one. The right fiduciary advisor will help you set healthy financial goals and develop a long-term plan to achieve them. Much like with personal relationships, you have to trust this person. In this case, with intimate personal information like your finances. 

Finding a trustworthy fiduciary advisor takes a bit of research on your part, but is worth it. . People often decide to switch financial planners due to high fees, weak portfolio performance, or lack of communication from the advisor. Lack of trust or transparency often plays a part, too. 

At Wealth Legacy Institute, we believe you should feel good about working with a financial planner. If you’re feeling uncertain about working with your current financial advisor or changing gears in your retirement planning, this post is for you. 

Signs it’s Time to Call it Quits

Sometimes, changing financial advisors is a natural process. Perhaps you’re moving or getting married, or are looking at retirement. However, it could be time to move on even if these big changes don't apply to you. Look out for these signs to determine if it is time to say goodbye to your current financial planner.

1. You don’t feel comfortable asking questions

Your financial planner should never make you feel guilty or stupid for asking questions. It’s their job to inform you and educate you about your financial future, no matter where you’re starting from. If you find yourself hesitant to call or email them with questions, it’s a sign. 

2. Your financial situation stays the same, but the advice changes 

One of the most significant advantages of having a financial advisor at your side is that they can help you adapt and plan for changes to your financial situation. Government changes to fiscal policy and unexpected bumps in the road happen, but your financial advisor should keep these events in context and not change their advice unless it directly impacts your financial plan.

3. They only call you when it’s time to buy or sell

Is your financial advisor on autopilot? They should be checking in with you at least quarterly to see how you’re doing on working towards your goals. They should also inquire about any changes that may have occurred to your financial situation. If not, they may be missing major changes in your life and financial situation that could impact your retirement planning. 

If the firm only calls when they want to execute a trade on your portfolio, they may not be your best-fit financial advisor.

Things to Consider When Changing Financial Advisors

Before hiring a financial advisor to help you with your personal retirement plan, it pays to do some research. Here are a few things to consider when looking for or changing financial advisors:

  • Ask if your advisor adheres to the fiduciary standard
  • Inform yourself about how they get paid (and be sure they disclose any and all fees from the start)
  • Make sure they are upfront about the risk of any financial product they offer you 
  • See if there are any fiduciary advisors located near you - meeting your financial advisor in person helps develop trust, and they have a better knowledge of regional laws and regulations

How to Leave Graciously 

If you’ve weighed your options and made the decision to switch financial advisors, what’s next? First off, congratulations! Finding a financial advisor who takes an active and objective stance to your retirement planning is the first step to a better retirement. 

Saying goodbye is never easy, but these tips can help you make the switch a little more smoothly. 

1. Have the conversation

We know it might be awkward, but you need to let your advisor know you want to cease the relationship. A call or an email should suffice; you’ll need to remain in contact with them as you transfer your assets (and to request tax documents in the future).

2. Be patient

Understand that if you need to move any assets to new accounts, the transition could take up to a few weeks. Your new advisor will handle any transfers, and your old advisor should cooperate to make it all go smoothly. 

You should also be aware that moving your money sometimes involves selling off assets. If this results in capital gains, you’ll owe taxes on moving your money. Your new financial advisor will keep you informed about all of this. 

3. Be open to change

Changing advisors might mean a change in strategies. Your new advisor may not make the same recommendations as your old advisor. And, that's to be expected. A fiduciary advisor always puts your interests first. If your previous advisor hasn't taken the oath, they may have been making investment decisions that benefited them

4. Check your contract carefully 

To avoid any surprises, check to see what steps you have to take to end the relationship. 

Some contracts include termination fees or require 30 days’ notice to assist with the smooth transfer of assets. In some cases, you may need to send a formal, signed letter of disengagement.

How To Be Sure You've Made The Right Choice

Changing financial advisors is a big commitment; how will you know if you’ve made the right decision? You know you're in good hands if your financial advisor:

If you’re ready to work with a financial planner in Denver to help get your retirement planning in gear, contact us today

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