Breaking up with your financial adviser
It isn’t as hard as you think to part ways with the person who manages your finances
So you’re in a relationship that just isn’t working.
You don’t communicate, you’re unhappy and your needs aren’t being met, but you cringe at the thought of ending things.
Breaking up is usually hard to do, even if the breakup is with your financial adviser. But it’s a very important relationship that involves your financial well-being and your money, so if you aren’t getting results, you have to rip off the Band-Aid, says Susan Latremoille, director of wealth management at Richardson GMP.
“You know you aren’t really happy with your financial adviser but are paralyzed by all the steps required to make the change,” she said.
“The truth is that you are dealing with an issue that is too important to ignore.”
SUSAN LATREMOILLE
WEALTH ADVISER
“However, the truth is that you are dealing with an issue that is too important to ignore,” says Latremoille, a longtime Toronto wealth adviser and business author.
“People often feel very conflicted about leaving their adviser. They feel guilty. But if you have any doubts at all about your adviser, all the more reason you need to make a change,” she says.
Here are her warning signs that it’s time to change your financial adviser, and by tips on how to do it if you must:
Why to worry
Infrequent contact: Six months go by and, other than your monthly portfolio statements, you haven’t heard from your adviser or their team. You wonder if they have forgotten about you or — worse still — have forgotten to monitor and manage your accounts.
Poor advice: Your adviser has pitched you on a new issue, stock or a portfolio structure that isn’t suitable to your situation. Your gut feeling is that he or she has a hidden agenda, and you worry that something is not in your best interest.
Lack of performance: Your investments consistently underperform and poor decision-making on the adviser’s part is becoming naggingly apparent.
Loss of trust: Trust is an instinctive feeling. Has it been lost, and do you no longer have the same confidence that your adviser truly has your best interests at heart?
Conflict of interest: Is the adviser promoting their firm’s in-house product? Is there a sense that objectivity is lacking?
No opportunity for feedback: Does the adviser send you a survey, conduct a satisfaction interview or periodically ask if there is anything more they can help you with?
You’ve outgrown your adviser: You started with your broker when your account was small and your needs were basic. Now, you have achieved greater wealth, and you are not sure that your adviser has the experience and wisdom to guide you with a larger sum of money.
What to do
Talk to them: If nagging feelings arise, the first thing to do is talk to your adviser and ask them the questions that are on your mind. If you don’t feel satisfied, make a move.
Do your homework: Ask friends and colleagues if they can recommend their adviser to you. Get three names, check out their websites and look for resonance about their offerings and your needs. Interview each one and ask for references. Check out their endorsements on LinkedIn. What qualifications and experience do they have? Is the firm independent and reputable?
Say goodbye: Once you have decided to make the change and completed the paperwork with the new adviser, contact your old adviser. An email will suffice if there is not much of a relationship, but make a phone call if you are closer. Though you’re not obligated to do so, “it is always preferable to provide some form of advance communication rather than have the adviser receive the unexpected shock of transfer documents,” says Latremoille.
However, you can also simply walk into your bank and have them transfer your portfolio to a self-directed investment account, or have any other financial adviser or online roboadviser do the same minus the dreaded breakup conversation.
“You may feel guilty. Don’t let that stand in your way. Be resolute. If the adviser tries to talk you out of it, stand firm,” Latremoille says.
“You are dealing with your life ahead — your financial life — and the investment you make in change will ultimately be worth the effort.”