In this article:
- Signs It May Be Time to Break Up With Your Financial Advisor
- 1. Read Your Client Agreement
- 2. Decide Your Next Move
- 3. Get Your Records
- 4. End the Relationship
Ending a relationship can trigger a ton of stress. In fact, divorce and separation rank among the most stressful life events that we go through.
But other breakups can be difficult too. For instance, ending your relationship with a financial advisor can be painful. After all, you've probably shared lots of personal details with your financial advisor.
If you think it's time to move on to a new financial advisor, these steps can ease the transition.
Signs It May Be Time to Break Up With Your Financial Advisor
Here are six signs that your current financial advisor may not be the right one for you.
- They're difficult to reach. If your financial advisor fails to respond to your calls or emails in a timely manner, you might want to look elsewhere for financial guidance.
- They're hard to understand. Your financial advisor is throwing language at you that you don't understand, and they don't bother to explain it. This might signal that moving to a different financial advisor is in order.
- They're not easy to approach. You should feel comfortable chatting with your financial advisor about all sorts of matters, including taxes, investments and estate planning. But if you find it agonizing to have these conversations, your financial advisor might not be the right fit.
- They're not keeping you updated. Are you being kept in the dark about the performance of your investment portfolio or the progress of your financial plan? It may be time to find a new financial advisor.
- They're not spending enough time with you. You're paying for a financial advisor's time. If you feel like you're being cheated in that regard, you may want to look for a financial advisor who can give you the biggest bang for your buck. It's worth noting that 28% of U.S. financial advisors confessed they didn't have enough time to spend with their clients, according to a 2023 survey by J.D. Power.
- They're giving you bad advice. Most folks who seek help from a financial advisor aren't financial wizards. They rely on an expert to point them in the right direction. However, if the advice you're receiving seems to constantly send you in the wrong direction, this may be a sign that you should break up with your financial advisor.
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If you're unhappy with your financial advisor, you're not alone. Case in point: Investor satisfaction with full-service investment advisors in the U.S. dropped 17 points from 2022 to 2023, according to a study by market research company J.D. Power.
Overall, just 11% of financial advisors in 2023 were delivering "comprehensive" financial advice, according to J.D. Power. This level of advice includes:
- Addressing all of a client's financial and wealth management needs
- Showing an "intimate understanding" of a client's lifestyle and goals
- Putting the client's best interests before any other interests
- Crafting a financial plan for the client
- Making sure a client understands the fees they're being charged
- Being an "integral part" of a client's life
So, is your financial advisor not living up to at least some of these expectations? If so, you might want to leave them. Here are four steps to take if you've figured out it's time to break up with your financial advisor.
1. Read Your Client Agreement
Once you decide to divorce your financial advisor, you should review the agreement that you likely signed with the advisor. Look for any requirements you might need to meet to end the relationship. For instance, does the agreement state you must give written notice that you're firing your advisor?
You want to be sure to follow the terms of the contract as closely as possible so you aren't on the hook for any additional fees when you sever the relationship.
2. Decide Your Next Move
Before you break up with your financial advisor, you need to map out your next move. Do you want to find a new financial advisor? Would you be OK with putting your trust in a robo-advisor to handle your investments? Or would you rather just go it alone? Your money and your future are at stake here, so give plenty of thought to how you want to go forward.
3. Get Your Records
Once you've broken the news to your financial advisor about the breakup, be sure to ask about gaining access to your records. These could be tax forms, financial statements or investment reports, for instance. If you decide to hire a new financial advisor, they may be able to help with the document transition by sending a formal request for your records.
4. End the Relationship
With those steps out of the way, you're ready to formalize the end of the relationship. Be sure to inquire about whether you need to sign any paperwork or pay any remaining fees, for example, before officially cutting ties.
Aside from ensuring that you're complying with any written agreement you had with your financial advisor, you should work toward a friendly, professional breakup. It's never a good idea to fully burn a bridge if you can help it.
The Bottom Line
Breaking up with anyone, including your financial advisor, can be awkward. But if you're not getting the kind of service and attention you deserve, you may need to search for an alternative. That may be a new financial advisor, or you might opt to try a robo-advisor or even handle financial matters on your own. Whatever you decide, remember that you're the client in this situation. You're the one person who you can make sure you're investing in the right financial advice.
