If you’re looking to switch financial advisors, here are three ways to ensure a smooth transition. First, remember that it’s just business - it’s not personal. Second, although your new advisor will do a lot of the transitionary work for you, send your (soon-to-be former) advisor a goodbye email and thank them for their services. Finally, transfer out! The last thing the old firm wants is a dead account on their books.
We encounter it often. HENRYs [High Earners, Not Rich Yet] complete the 5-6 week Stash Plan and want to sign-up for Stash Management. But despite their enthusiasm to finally receive the level of hand-holding they know they deserve, they are afraid/intimidated to kick their current financial advisor to the curb for fear of upsetting them. We get it, if there's one thing online dating has taught us, it's that while technology has made it easier to start a relationship, break up is still hard to do! Changing financial advisors can be just as hard.
While it's rare for a HENRY to have a financial advisor in the first place, many do. If you're a HENRY with a financial advisor, it's likely because you were connected through your parents, or your financial advisor is a friend who was getting started in the business and willing (read: begging) to take on small accounts. The truth is most Wall Street firms don't want to talk to you unless you have a million dollars, and even if you have a million dollars, you're like a D-List client to them. They'll take your money, throw it into some investments but then you'll rarely hear from them again - you're simply not worth their time. If this feels familiar, read on for how to break up with your financial advisor in a few quick and painless steps.
1. Remember, it's business
You don't owe them anything. For better or worse, your financial advisor is not a philanthropist. They do what they do because they enjoy helping people but also,to make money! As with all things business, each party is responsible for looking out for themself - that includes you. If you're feeling compelled to move on from the relationship, trust your gut, there's probably a good reason. Most commonly, lack of attention or comprehensive financial planning. Also, your current advisor is used to clients leaving for a multitude of reasons. They will be less offended by it than you think - so don’t stress too much. It’s common and doesn’t mean you don’t like them as a person. You're justpicking a business relationship that better suits your needs.
If there's one thing online dating has taught us, it's that while technology has made it easier to start a relationship, breaking up is still hard to do!
Finally, and not to sound rude, but it might be a relief to them. Management at big firms regularly encourages Financial Advisors to shed "the bottom tier of their book". Your leaving saves them the logistical practice of "transitioning accounts to a team that can better suit your unique needs" (jargon for handing you off to an advisor that handles small accounts).
2. Rip the band-aid (aka send them a goodbye email)
While you're not obliged to contact your advisor before transitioning your accounts to a new firm, we believe in the Golden Rule. You can either call or email your advisor - but letting them know you're leaving and why is a nice thing to do.Your new advisor will actually do all the work of transitioning the accounts for you. A simple email like this would work great...
"Hi <Advisor’s Name> -
I am writing to you for two reasons: first, to thank you for your advice and guidance over the years and second, to address the next steps in my financial journey. At this time, I’ve decided to move in a different direction and will be moving my account(s) to another institution that I believe is a better fit for me going forward. As a courtesy, I wanted to reach out and notify you as you will be receiving the transfer requests shortly.
Thank you again,
<Your name>”
That’s it…just like removing a Band-Aid, the quicker the better, for all involved. Note:If you don’t have a specific advisor at your current firm (like Merrill Edge or Betterment), you can skip this step.
3. Transfer out
The last thing a financial advisor wants is "a dead account" on their books. It's a compliance issue for the firm of record as well! So once you've notified your advisor that you're moving your accounts, you'll want to take the next steps as soon as possible. Your new advisor or investment firm will be responsible for all the heavy lifting regarding to transitioning your accounts over.Transfers typically take 7-10 business days, but sometimes sooner. All interactions from this point forward will be with your new advisor. Remember, it’s your money and you need to do what’s right for you. Like a bad relationship, staying in it because you want to avoid the breakup is not reason enough.
Want to learn more about how we do things at Stash Wealth? Click here to book a call to determine if you're a HENRY [High Earner Not, Rich Yet] and qualify for our flat fee financial plan, the Stash Plan.
