Sometimes it’s necessary to change financial advisors. Yours might not be performing adequately, they might no longer provide all of the services you need, or they simply might be retiring. It also simply doesn’t work out between client and advisor. There are any number of reasons why people periodically change advisors.
If you’re considering switching financial advisors, or have already decided to, here’s how to transition to a new financial advisor. You’ll need to find an advisor, transition accounts, and meet with your new advisor. A well-planned transition will ensure the process goes smoothly, and maintain some continuity despite this change.
Step 1: Evaluating Your Current Situation
The first step is to simply evaluate your current financial situation and future financial goals. These are fundamental considerations if you’re unsure whether to leave your current advisor. If you’ve already made that decision, a thorough evaluation will help you find a new advisor who’s a better match for you.
Gather all relevant documents, including your asset allocation plan, investment statements, recent performance reports, and any other relevant financial documents. These will show in quantitative terms what your financial situation currently is, and how well you’re portfolio has been performing.
Also consider the more qualitative questions, such as your risk tolerance, financial goals, and any monetary concerns. Do you need assistance with retirement planning, saving for educational expenses, transferring wealth, or something else? How do you feel about your current investment allocation, and the corresponding risk exposure? It’s helpful if you write these and other thoughts out, perhaps while having a coffee or during a discussion with your partner.
If you have any difficulty finding documents, you can likely access them through an online portal that your financial advisor uses. Alternatively, they or their assistant can send you statements and other details. If you have significant assets outside of what’s with your financial advisor, at least make notes on those assets too.
Step 2: Finding Your Ideal Advisor
Any new financial advisor should be well qualified, provide the services you need, and take time to understand you. You want someone who’ll be a good mentor in financial matters.
Traditional methods of finding a financial advisor usually involve contacting advisors or banks in your area. Just because an advisor is close to you doesn’t mean they’re well-suited for you, however. In fact, geography has little to do with whether an advisor and client are a match.
At Invested Better, we’ve taken what does matter to create a better way of finding your financial advisor. Our extensive network of advisors includes professionals with diverse backgrounds, qualifications, and services, so there’s almost certainly someone (or several options) who’s a good match for you.
To find that match, we focus on the questions that matter to the advisor-client relationship. Answer a few quick questions about your age (for investment horizon), major life events (which could bring financial changes), preferred services, and some other details. We’ll then match you with a financial advisor who’ll be able to serve you well.
The process requires just a few minutes of your time, and the questions are strategic but easy to answer. You can get started by completing our financial advisor matching tool.
Step 3: The Transition Process
Transitioning between financial advisors is something that you’re probably not familiar with. Financial advisors know how to manage the practicalities of transitioning, though, and both advisors have undoubtedly helped clients come and go before.
Gather Account Documents
You’ll want the documents that you gathered in step one. If you didn’t take the time to get documents then, now is the time to gather account records and statements from your current financial advisor.
It’s easier to get them before you actually change advisors, as you’ll still have access to online documents. Of course, reach out to your current advisor or their assistant if you have any trouble locating something.
Inform Your Current Advisor
You should inform your current financial advisor that you’ll be leaving for a new advisor. It’s generally a best practice to provide a written statement (email is usually fine) to this effect, but also plan on talking in person or on the phone.
Understandably, clients are sometimes hesitant to let their advisor know they’ll be ending the professional relationship. Don’t stress too much over the conversation, though. Advisors are professionals, and you almost certainly aren’t the first client to cease using their services. Any advisor worth using should be able to handle this situation with respect and understanding.
Make sure you also act respectfully and professionally during this conversation. They’ll likely ask why you’re leaving, and will probably try to convince you to stay. Having a good reason for your decision makes it easier to answer any objections they might raise. You should also have a timeframe for completing the transition process. Just be grounded in your decision, and respectful in your communication.
In the vast majority of situations, the conversation about leaving is not nearly as big a deal as clients sometimes worry. It’s a straightforward conversation, and one advisors have had before.
Coordinate with Your New Advisor
The logistics of transferring accounts are normally handled by your new financial advisor. They’ll explain the process, and will typically work directly with your current advisor when transferring assets.
You’ll need to sign some transfer authorization forms, allowing the new advisor to transfer assets. There might be other legal requirements and forms, depending on your situation, and some advisors may ask you to sign documents formalizing your new relationship.
In most cases, you can trust that your new advisor will know what forms are required. They’ll let you know what needs to be signed, and most can work with print forms or electronic signatures.
Step 4: The Initial Meeting WIth Your New Financial Advisor
Once the logistics have been taken care of, schedule an initial meeting with your new financial advisor. You’ve likely already talked with them, to make sure they’re a good match for you. It’s time to have a longer meeting now that everything has been transferred, though.
The purpose of an initial meeting is to establish rapport and understanding. Openly discuss your financial goals, risk tolerance, investment preferences, and any other relevant details about your financial situation. The more forthcoming and thorough you are, the better they’ll be able to help you.
The outcome of the meeting will likely be a personalized financial plan. You likely won’t have a comprehensive lifelong financial plan after just one meeting, but there should be the start of a financial plan that’s based on what you need.
You should leave this meeting with an understanding of what concrete steps will be taken to improve your retirement planning, estate planning, or any other financial matters that have been discussed. If certain parts of your financial plan require further discussion or follow-up, those meetings should be scheduled for soon after the initial meeting.
Step 5: Maintaining Open Communication
Open and consistent communication is essential for a successful ongoing relationship with your new financial advisor.
Ask your advisor how often you can expect portfolio updates or messages on market conditions. Most advisors have set schedules for these, and you’re welcome to ask at any time.
Your advisor will also probably check in periodically, with the frequency depending on your situation and needs. These check-ins could be in person, over the phone, or perhaps via email at times. During the initial few months, there might be additional meetings so you can further develop a personalized financial plan.
As a client, be responsive to your advisor when they check in or ask for a meeting. Be sure you update your advisor whenever there’s a major change that could impact your financial situation or goals.
Don’t be afraid to track your new advisor’s performance, especially during the initial few months or year. Compare the investments they suggest to your goals, risk tolerance, and overall financial plan. Let them know whether their advice matches your goals and risk tolerance, so they can make adjustments if necessary.
Transition to a New Financial Advisor
Transitioning to a new financial advisor requires evaluating your situation, communicating with your current and new advisor, and actually transferring assets. Before you can switch advisors, however, you first need to find a new financial advisor.
For help finding a new financial advisor, use our quick online advisor matching tool. Based on a few questions, our advanced algorithm will pair you with someone who’s specifically qualified to assist you. You can then begin the transition process with them.
General Disclaimer: The information provided on this site is for informational purposes only and should not be construed as financial advice. Invested Better does not guarantee the accuracy or completeness of the information provided. Please consult with a licensed financial advisor before making any financial decisions.
Investment Risk Disclaimer: Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.
