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3 Reasons to Switch Financial Advisors (And How to Do It Quickly)

Get Smart with Your Assets

SmartAsset is a personal finance technology company that features a financial advisor matching service. Financial Advisors who appear on SmartAsset are from companies with which SmartAsset receives compensation. SmartAsset takes into consideration wealth and location to determine how to match users with advisors. SmartAsset doesn't include the entire universe of Financial Advisors.

*Northwestern Mutual study

For many people, switching financial advisors seems like an expensive headache so they put it off, indefinitely. Especially when the market is down or volatile, making a major change in how your money is managed can seem like a daunting task.

However, replacing your advisor doesn’t have to be a hassle or come with high costs, and right now is a crucial time to make sure your money is in competent, capable hands.

Here’s why: Economic growth won't approach "normal" until as late as 2025, according to Bank of America’s Chief Investment Office.

Emotionally-charged decisions to sell off large quantities of stocks or other investments now lock in your losses, removing any chance for future growth. Research suggests working with a financial advisor can result in up to 4% additional investment returns and some mutual fund returns can average 10% each year.

If you feel like you don’t have the right financial advisor for your needs, our no-cost, five-minute tool can help match you with up to three near you. All advisors on the platform are fiduciaries, legally bound to act in your best interest. Each is registered with the U.S. Securities and Exchange Commission (SEC) or the appropriate state regulator and any licenses or credentials are current. We also screen advisors for pending or valid regulatory disclosures within the past 10 years.

If you’re unsure whether you switch financial advisors, here are some factors to consider and how to efficiently expedite the process.

3 Good Reasons for Switching Financial Advisors

1. Your advisor is not a fiduciary -- or even a real financial advisor.

A new SEC rule going into effect in June, 2020, called “Regulation Best Interest” requires investment brokers and brokerage firms to stop labeling themselves as financial advisors. Brokers are able to recommend investment products and collect hefty commissions.

Fiduciary financial advisors are required to put their clients' best interests first and disclose potential conflicts of interest. This new tool can quickly match you with local fiduciary advisors.

2. Your advisor is inaccessible, gives unclear, jargon-filled answers or has bad follow-through.

Knowing what your advisor thinks about the market and how it may impact your investments is crucial. You should never walk away from a conversation feeling more confused than comforted.

3. Your advisor thinks they’re smarter than the market.

Research shows most active funds and managers underperform the markets. Someone who thinks otherwise should not be managing your money.

3 Steps for Efficiently Switching Advisors

1. Find a New Advisor First

Finding a new advisor first helps ensure a prompt hand off your assets to the new advisor. You can then rely on the new advisor’s expertise in transferring investments, which can be complicated and costly if gains are realized as a result of exits made.

To quickly find a new advisor with your best interests in mind and tailored to your specific needs, utilize our no-cost financial advisor matching tool. It takes about five minutes to complete a survey about your financial situation before matching you with up to three vetted fiduciary advisors local to you.

2. Know What to Expect

Your contract with your advisor has a termination clause, which you probably didn’t read closely when you signed. You need to know what fees are applicable for closing your account and how management fees are calculated if you’re closing mid-quarter.

Additionally, read your last statement for any proprietary investments or annuities that can’t be transferred or funds that have exit fees (e.g., B-shares of mutual funds). Have the two advisors outline any illiquidity or transfer restrictions or transfer costs before creating negative outcomes from taxes or fees.

3. Notify the Old Advisor

This last step is probably the hardest, but doesn’t have to be. You could just let your new advisor put in the paperwork for a transfer, but consider sending an email to the old advisor. They may try to contact you – by law, they can call you one more time after being notified. Or call the advisor and then follow up with a letter or email. Thank them for their service, but resist the urge to say you’re sorry -- you have to do what’s in your best interest.

How to Compare Fiduciary Financial Advisors at No Cost to You

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.

Our no-cost tool helps makes it easy for you to find the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have been rigorously screened for regulatory disclosures and to confirm their licenses. The entire matching process takes just a few minutes.

Follow These Steps to Get Matched With the Vetted Fiduciary Advisors

1. Simply enter your ZIP code below.

2. After you enter your ZIP code and answer questions about your financial goals, you can compare up to three advisors local to you and decide which to work with.

3. Enjoy a better financial future!

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