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How to Fire Your Financial Advisor in 4 Simple Steps

Wealthtender logo: MainLogo Wealthtender 10/1/2022 Wealthtender

One of the most important financial decisions we make is who we take financial advice from. This is especially important if you are paying for financial advice. What do you do if you are getting bad advice, and how do you fire a financial advisor?

As someone who writes about money, there is nothing more important than going out into the real world and talking to actual people about money. It’s very easy to get trapped in our writer’s bubble in the personal finance community, where we enjoy nerding-out over very advanced financial topics. Most people in the real world are not thinking about house-hacking or how to retire in 10 years. Real people have more fundamental concerns about money.

Table of contents

  • When the Question Is “How” Not “If”
  • How to Fire Your Financial Advisor in 4 Simple Steps
    • Step 1: Review Your Contract
    • Step 2: Decide What You’re Going to Do Next
    • Step 3: Request a Copy of Your Investment Records
    • Step 4: Fire Your Advisor

When the Question Is “How” Not “If”

I recently had the chance to catch up with many people I had not seen in quite some time. During one of those conversations, the topic of money came up (as it tends to when someone is speaking with me). One person said they would love my advice on a financial problem that has been stressing them out.

“How do I fire my financial advisor?”

This person did not want to know if they “should” fire their financial advisor. They were quite clear on the fact that the advisor needed to be fired. What they wanted to know was “how” to do it. They were looking for a step-by-step on how to fire their financial advisor and what to do with their money afterward.

I had to admit that I have no experience with the issue as I always have self-managed my finances. The more I thought about it, the more I realized why this is a stressful issue for people.

The power dynamic in an advisor-advisee relationship is tilted heavily towards the advisor. The advisor is the expert on financial matters, that is why you people hire them. This can make it very difficult for some people to challenge their advisors or even ask questions about what the advisor is doing with their money.

“People generally look to avoid confrontation, and firing your advisor can be very uncomfortable,” said Erik Nero, CFP – Founder and President of First Step Wealth Planning. “Most advisor relationships die of neglect rather than failure. It is difficult to break up with someone that the client may have used for years, that they may generally like and feel has done a good job. But if the advisor is no longer proactively exploring for what is relevant to the client, the risk of maintaining the relationship could outweigh keeping it.”  

Before making any major moves, reflecting first on what may be going wrong is a good idea. The situation could be resolved by talking it over with your advisor. 

“Think about why you are unhappy with your adviser. Is it poor performance, irregular communication, high fees, or a misunderstanding? Most advisers want happy clients, so explaining why you are unhappy may easily fix the problem.” said Rob Lloyd, CFA – President at Lloyds Intrepid Wealth Management

“A good financial advisor should have a clear understanding of your needs and be working proactively to meet them,” said David Edmisten, CFP and Founder of Next Phase Financial Planning.

“They should be anticipating changes and providing advice to help you make informed decisions,” he added. “They should be able to clearly articulate the value they provide and demonstrate this value to you on an ongoing basis throughout your relationship. If your current advisor is not meeting your needs and is not able to provide the service you expect, you are always free to look for a new advisor.”

If you are sure it’s time to move on, wait no longer. This is an important issue, and providing a detailed answer would provide tremendous value to my readers. I’ve been researching this question for the past several weeks, and I am pleased to present this brief guide to firing your financial advisor.

How to Fire Your Financial Advisor in 4 Simple Steps

There are four steps you need to take before actually firing your advisor.

Step 1: Review Your Contract

When you first hired your financial advisor, you likely had to sign a bunch of paperwork. Read through these documents carefully. There is likely a clause about how to terminate the relationship with the advisor.

If you can’t find the contract, ask your advisor or their administrative assistant for a copy of your contract. There are two particularly important sections of that contract.

  1. Instructions on how to terminate the relationship. Often you are required to provide the advisor with a signed letter formally terminating the relationship (more on that soon).
  2. Fees. Often there is a termination fee or other fees involved in terminating your relationship with the advisor and pulling your money out. These fees may be charged by the advisor themselves, the investment funds they have you in, or both. It’s critical to ensure you are aware of what those fees are before you fire your advisor.

Step 2: Decide What You’re Going to Do Next

Before you fire your advisor, it’s a good idea to know what you will do with your money going forward.

You have three options to consider.

  1. DIY. If you are comfortable managing your own money, you could transfer investments to an online broker and handle things yourself.
  2. Find a new advisor. If you want someone to guide you through the process, you’ll want to hire a new financial advisor you can trust. I suggest looking at a fiduciary “fee-only” financial advisor. Fee-only advisors charge a predetermined price to provide you with financial advice. This is the best way to get unbiased advice, as fee-only advisors do not have a financial incentive to put your money in a certain fund or sell you insurance.
  3. Robo-advisors. These are a good alternative for people who aren’t quite comfortable managing their investments themselves but aren’t in a position to pay the costs of a fee-only advisor.

Do your homework and choose the path you are most comfortable with moving forward.

Find Your Next Financial Advisor on Wealthtender:

Step 3: Request a Copy of Your Investment Records

The final step before firing your advisor is to request a copy of your investment records. You have a right to these files, which have valuable information on your investing history.

Step 4: Fire Your Advisor

It’s finally time to fire your advisor. Refer back to your contract with your advisor, as it likely details the exact process that must be followed to terminate the relationship. Odds are you will be required to provide the advisor with a signed letter. You have two options to deliver this letter.

  1. If you are working with a new advisor. Let the new advisor handle the uncomfortable part of firing your previous advisor. They will likely provide you with a few forms to sign and might be able to handle the rest with your old advisor.
  2. If you’re handling your finances moving forward. Be sure to follow the termination instructions in your contract. Include all the necessary information in a letter to your advisor, but keep it brief and professional. You don’t owe them a lengthy explanation, and a quick, clean break is in everyone’s best interest.

If you have a financial salesperson rather than an advisor, be prepared for them to try and talk you out of leaving. Do not feel compelled to engage in a “retention pitch.”

Make it clear your decision is final and stick to the business at hand, the transfer of your assets, and all the necessary paperwork.

There are some steps you can take if the advisor tries to hold on to you. 

“Threaten to file a complaint with the compliance department or state regulator. That always gets people’s attention,” said Lloyd.

Breakups are never easy. Situations involving the heart or the wallet can be very stressful and emotionally draining. It’s essential to do your homework so that you can make the break as clean and painless as possible.

Ben Le Fort © Provided by Wealthtender Ben Le Fort

About the Author

Ben Le Fort

Hi, my name is Ben. I am the founder of Making of a Millionaire. I have been obsessed with personal finance and learning how to manage money, ever since my parents declared bankruptcy and lost the family home to foreclosure in 2010.

I spent the next 10 years continuing my journey of educating myself about money. This education was both formal and informal.  

On formal education, I earned a Bachelor’s and a Master’s degree in Finance & Economics. 

On the informal side, I consumed every book, video, blog post, and podcast that discussed personal finance.

Education was nice, but it wasn’t until I began implementing what I learned that I began feeling more hopeful about the future. 

Before long, I had paid off my first loan. Then the next. By 2015 I was debt-free. By 2016 my wife and I bought our first house. Then we started investing. We bought another house and began building real wealth.  

As our wealth grew, the memories of that family bankruptcy seemed further and further in the rear-view mirror. My stress and anxiety began to melt away and I was able to sleep at night without my mind racing and problem-solving.

By 2018 I knew it was time to start sharing what I learned about managing money and Making of a Millionaire was born.

I hope you find the articles, videos, and courses created by Making of a Millionaire to be of value to you. Please feel free to reach out to me directly if you ever have feedback or questions.

You can read all of my articles on my personal site, or on Medium. If you’re interested in video-based personal finance tutorials and education, you can Subscribe to my YouTube channel or check out my in-depth personal finance course.

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