How to Break Up With Your Financial Adviser
Ever get the impression that your financial adviser just isn't that into you? It could be time to move on.
However, clients have a lot more control than many people realize. Garrett suggests that in a lot of cases, "if the adviser is not working out for you or is not meeting your expectations, you should express what you want and give them an opportunity to correct it."
Reasons for leaving a financial adviser include:
Lack of communication
As with marriage, the issue often boils down to a breakdown in communication. In fact, a
Mismatch of personality or values
Frustration over fees
Many investors don't understand advisers' fee structures, according to Garrett, so as the relationship evolves, they may not feel they're getting their money's worth. "It could be a very legitimate situation that they've benefited greatly from the work with the adviser in the early months or years, " she says. "But now as things are clicking along as expected, the adviser may still have a fairly substantial fee but the client is just receiving maintenance." Garrett says it's fair to question fees that you don't understand or ask if your adviser is willing to revisit fees.
Even the best advisers can have a less-than-stellar quarter, but if your assets are consistently underperforming over a longer period, it could be time to move on. According to Koos, the average "up" market lasts about three to four years, while the average downmarket lasts about one year. "Two to three years is more than enough time to see how a financial adviser has done through both down and up markets," he says. Garrett suggests getting a second opinion from a fee-only adviser on an hourly basis if you aren't sure how your investment fees and performance measure up or if you sense you're being sold products that aren't in your best interest.
Ethical or legal issues
The last thing you want is to entrust your investments to the next
A major life event
If and when you decide to move on, a letter is often the best way to communicate that decision, because many people are uncomfortable dumping their adviser in person or over the phone. As Koos points out, if you call the adviser, he or she will be likely try to convince you to stay. A letter is also a good way to document a complaint if you have one.
Those letters are courteous but rare, according Garrett. More often, advisers find out they've lost a client when they get a request to transfer funds. "They have been known to call the client and say, 'Mary, what did I do wrong?'" explains Garrett. "I let clients use me as the bad guy, saying 'we have chosen to work with Sheryl going forward. If you have any questions, you can call her.'"
To ease the transition, make sure your new financial adviser has all the statements from your old firm. Koos recommends filling out the new paperwork in person so you don't miss a form or signature line.
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Personal Finance - How to Break Up With Your Financial Adviser
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