How to Break Up With Your Financial Advisor, Nicely

A new client of ours recently posed a question to me that I wasn’t expecting: “How do I let my old financial advisor go?”  Turns out, she is not alone.

According to a 2015 study by Spectrem Group, 58% of high-net-worth clients have switched advisors in their lifetimes.  As consumer education grows regarding financial advice and the various business models for offering it – and in particular whether an advisor is a fiduciary or not – the movement of clients to new financial advisors likely will also grow.

And yet, inertia can be a powerful deterrent.  I’m continually surprised by clients who stayed with their former advisor for far longer than they should have, and they recognize this, but were reluctant to make a move.  People switch other professional service providers all the time – hairdressers, gardeners, tax preparers, insurance agents – but none of these is managing your life savings, and the thought of a transition can be overwhelming.

If you are dissatisfied with your current advisor and are contemplating a move, do your research first.  Once you have made the decision to engage your new advisor, it’s time to inform your current advisor that you are making a move.  And here is where my new client needed some help.

The first thing I asked her was, “Why did you decide to look for a new advisor in the first place?”  In her case, she was receiving a large settlement, and she instinctively had a feeling that her current advisor was not the right person to handle it.  She had some charitable objectives and was not confident in her current advisor’s expertise in that area.  In other words, she was looking for more comprehensive, holistic planning and advice than she was currently getting.

Knowing that her current advisor would be notified of her transition once we start moving assets into new accounts, I encouraged her to have a frank and open conversation with her current advisor sooner rather than later and let him know the truth about her decision while acknowledging the work he had done for her:

I appreciate everything you have done for me.

At this point in my life, my needs have changed and I am making this move to better meet my needs.

This is not personal.  It’s about me and what I need right now.

Thank you.

Afterward, she told me that the conversation went well.  She had been nervous about it, but my coaching had helped her figure out the words to use.

Some advisors may not let go so easily.  Another client of mine was visited by his former advisor (who was an insurance agent) at his place of work to guilt my client over having made a move!  Fortunately, I had also coached this client over what words to use, and he was able to gently affirm to his old advisor his honest reasons for having made a move.

If you are thinking of breaking up with your advisor, being up front and honest is the way to go, even if you are deeply dissatisfied for whatever reason (level of service, investment returns, lack of proactive contact).  Be sure to review your advisory agreement to understand whether there are any fees or other restrictions that might impact your ability to transition to a new advisor.

In the end, it’s your money.  Don’t let fear of a break-up stop you from seeking out the services of an advisor who best meets your needs.

Questions or comments?  Contact me on Twitter @juanros or LinkedIn.

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