Break­ing up with your ad­viser can be hard to do

In­vestor ex­pec­ta­tions have in­creased over the past 10 years and plan­ners aren’t al­ways meet­ing them


When Deborah Ison de­cided to break up with her fi­nan­cial ad­viser last year, in­vest­ment per­for­mance had noth­ing do with her de­ci­sion.

The 45-year-old hu­man re­sources project man­ager from Burling­ton, was in the midst of a di­vorce and went to her ad­viser with press­ing ques­tions about her fi­nan­cial obli­ga­tions.

But rather than ad­dress­ing her con­cerns, she says, he quizzed her on in­vest­ment risk tol­er­ance and re­tire­ment goals.

It was then and there that Ison de­cided to make a switch.

“I had walked into this of­fice pretty much a bro­ken per­son. My en­tire fu­ture had done a 180,” she says.

“I didn’t know how I was go­ing to pay my mort­gage or my bills or my debts. The fur­thest thing from my mind was my re­tire­ment. It seemed like an ob­tuse and in­sen­si­tive ques­tion for him to be ask­ing me.”

Rona Birenbaum, a fee-only fi­nan­cial planner with Toronto-based Car­ing for Clients, says ex­pe­ri­ences like Ison’s are of­ten the cat­a­lyst for call­ing it quits with an ad­viser.

“There’s two things I al­ways hear: ‘I feel like I’m al­ways be­ing sold to,’ or ‘I feel like I’m be­ing talked at or talked over.’ And so it’s a re­la­tion­ship mat­ter,” she says.

“Oc­ca­sion­ally I hear, ‘I’m not happy with per­for­mance,’ but that’s rarely, if ever, first on the list.”

Notably, Birenbaum adds, clients’ ex­pec­ta­tions have changed over the last 10 years.

“Whereas in­vestors once looked to their ad­viser for pure in­vest­ment ad­vice, they’re now de­mand­ing more,” she says — whether that’s tax ef­fi­ciency, debt pay­ment tips, choos­ing to in­vest with RRSPs or TFSAs, or ques­tions about what type of life­style they can af­ford right now.

“So they’re less fo­cused on the prod­uct se­lec­tion and the prod­uct choice as they are around the whole money man­age­ment and life­style plan­ning mat­ters.”

Tom Feigs, a money coach in Calgary, says that if you do find your­self at a cross­road with your ad­viser, take the time to fig­ure how your ex­pec­ta­tions aren’t be­ing met.

“Be clear if it’s fees or com­mu­ni­ca­tion and if it’s some­thing that can be fixed,” he says.

“If it’s just an in­tu­itive sit­u­a­tion, maybe give your ad­viser an op­por­tu­nity to re­spond about what’s con­cern­ing you, and if you’re not happy with the re­sponse, then start a plan of shift­ing.”

By no means should peo­ple abruptly end the re­la­tion­ship with­out hav­ing a new ad­viser wait­ing in the wings, Feigs stresses. “You don’t want to be in limbo.”

If you’re firm on leav­ing your ad­viser, Birenbaum says, it’s of­ten worth­while to be hon­est and up­front.

While you’re un­der no obli­ga­tion to do that — a new ad­viser can han­dle all the trans­fer pa­per­work on your be­half — it could save time and money.

“If an ad­viser re­ceives no­ti­fi­ca­tion that an ac­count is leav­ing, they may take time to scram­ble and try to main­tain that re­la­tion­ship,” Birenbaum says.

“But if they’re aware of your de­ci­sion and it’s clear you’re de­ter­mined to make that change, your ad­viser, if they’re pro­fes­sional, will do what they can do to ex­pe­dite it and find ways to mit­i­gate or re­duce the costs.”

Many in­vestors are sur­prised by the out-of-pocket ex­penses that can come with switch­ing fi­nan­cial ad­vis­ers.

That could in­clude a cap­i­tal-gains tax for mov­ing non­reg­is­tered ac­counts, as well as trans­fer fees of up to $150 to $250 per ac­count depend­ing on whether the new ad­viser will cover the costs.

Some­thing else to be aware of are de­ferred sales charges, a back-end fee charged to mu­tual fund in­vestors who re­deem their in­vest­ment prior to a set pe­riod of time.

Still, if you feel your ad­viser will re­act poorly to news that you’re switch­ing, de­fer to other pro­fes­sion­als to fig­ure out the fees as­so­ci­ated and how to lighten the load, Feigs says.

“Dif­fer­ent sit­u­a­tions mean dif­fer­ent ac­tions,” he says. “If it’s a clearcut case of know­ing you want to leave, I’d have the switch made with a pa­per trail.”

That’s what Ison did when she en­listed the ser­vices of her new ad­viser, a bro­ker who had helped an ac­quain­tance of hers through a sim­i­lar sit­u­a­tion in­volv­ing di­vorce.

“I left it up to my new ad­viser and that made it all seam­less,” she says. “I was never put in an un­com­fort­able sit­u­a­tion or had to con­tact my for­mer bro­ker.”

“There’s two thing I al­ways hear: ‘I feel like I’m al­ways be­ing sold to,’ or ‘I feel like I’m be­ing talked at or talked over.’ And so it’s a re­la­tion­ship mat­ter.” RONA BIRENBAUM FI­NAN­CIAL PLANNER


In the midst of a di­vorce, one woman found her fi­nan­cial ad­vsier to be tone-deaf to her sit­u­a­tion.

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