Zack Blanton/Shutterstock
Breaking up is hard to do. And that holds true whether talking about a romantic relationship or a professional one. There's no easy way to tell someone that the relationship is no longer working.
According to studies, breakups spike in the days after "expectation holidays" like Valentine's Day. You had an expectation; the expectation wasn't met.
There are parallels to be drawn between breaking-up with your financial adviser and breaking-up with a love interest. Did trust disappear? Did goals change? Did communication wane?
In my opinion, the following are some reasonable reasons to leave an adviser:
- High or unexplainable fees
- Poor service
- A poor personality match
- Differences in investment philosophy
- Consistently underperforming the market, despite taking similar risks to the market
Depending upon the current state of the relationship, you may wish to handle the "breakup" on your own, or leave that task to your new adviser.
1. Have your new adviser send/file the paperwork
Your old adviser will find out you left when the transfer paperwork tries to claim your accounts. This may be your preferred method if you are one of the many people who prefer to avoid any type of confrontation, or if the relationship has become contentious.
2. Contact your adviser, thank them for their service, and ask for transfer paperwork.
In my opinion, letting your adviser know you are leaving them is the right thing to do. A call will do. An email will do too. Thank them for their service, and let them know you are going a different direction. They may ask why. If you feel comfortable in letting them know why, go ahead and tell them.
Your goal isn't to get into a debate, it's to end the relationship and move on.
3. Call the 800 number
In the rare instances in which an adviser's conduct needs to be reported, call the firm's customer service department directly. This allows you to inform the firm of any suspected wrongdoing. There's a difference between your investments lagging in performance to the market and wrongdoing. If you feel like you were lied to, or fraud is occurring, report it.
The sad reality
Depending on where your financial person works, they may be limited in the products and services they can offer you, based on what their company allows or doesn't allow. Such an adviser may not be a bad person; they simply may not be able to provide the best services for you or the most reasonable fee structure for you.
Unfortunately, a financial professional isn't likely to leave the firm they are working for because they risk throwing away their entire books of business if they switch firms, due to noncompete agreements.
Final thoughts
I understand you may not want to deal with confrontation or change involved with ending a relationship with an adviser. But if the relationship isn't meeting your needs, and high fees are eating up your returns, leaving your adviser is best done sooner, rather than later.
