Monument Resource Center
Our clients hire us because they recognize the value of our Team’s unique, straight-forward, unfiltered opinion and our tailored advice designed to answer their questions, not everyone else’s. Below, you’ll find some of the most important questions we have been asked over the years to help you better understand the role we play and the advice we give.
There are all sorts of reasons why people leave their wealth advisors:
- Poor or close to NO communication from their advisor
- Tired of pompous corporate arrogance and overcomplicated jargon
- Lack of trust and confidence in their advisor’s decisions
And there are many reasons why people stay in an unhealthy relationship with their wealth advisor for far too long:
- Their advisor is an old college friend
- They were introduced by their parents, who also work with this advisor
- It’s overwhelming to find a new advisor and don’t know where to start
But just like in dating, a time comes when you need to leave. The hardest part is knowing what to say, what to do, and overcoming the fear of doing it.
Before you break up with your current advisor, you’ll want to make sure you have a plan in place for who will be managing your wealth going forward. Once you’ve decided on a new advisor, there are a few things to take care of before giving your “notice” to your current advisor, so that you are prepared to transfer your assets efficiently.
In this article, we’ll share our playbook for transitioning wealth management clients and how to make the transition as painless as possible.
Before the Breakup with your Wealth Advisor
There are key actions you’ll want to take before you end the relationship with your current advisor, so don’t put in your notice quite yet. Use this checklist to take care of some housekeeping items first:
1. Pull Your Account Statements
Do you have an IRA? A Trust? An Individual account? Pull all your current account statements so you can provide them to your new advisor. This ensures the new account titles match the old accounts for easy transfer.
2. Review Your Account Holdings
Your new wealth advisor should look at the cost basis of your holdings for proper gain and loss reporting on your investments. Additionally, confirm that the investments can be held with the new wealth advisor, and if not, what needs to happen. Sometimes non-standard assets (for example, private equity positions) can’t be transferred to the new custodian. In that case, the new advisor should connect directly with the private investment firm to include the assets in your client portal. This way, they have a full picture of your holdings to advise and report on.
3. Confirm Account Features
Your new advisor should confirm your account preferences, like check writing, auto-distributions, beneficiary information, and options trading. For example, if you have contributions on autopay, you’ll want to cancel them before the transfer is initiated. You don’t want to continue sending money to the institution where you’ve closed your accounts!
4. Take Required Minimum Distributions
If you’re taking Required Minimum Distributions (RMDs), make sure this is done before the breakup, because your current advisor will have all the details needed to initiate your distribution.
How to Break up with Your Wealth Advisor
After you’ve outlined a plan of action for the timing of the transfer, connect with your current advisor to let them know you’ve decided to terminate the relationship.
Having the “Break up” Conversation
This can be a difficult conversation to have, so take some time to think through the reasons why you are making the switch and write them down. It may help to bullet-out the specific points you want to make during the conversation. This way, when you are in the throes of the actual conversation, you can reference your listed reasons and be sure to get all your points across.
Keeping to your “script” will help you stay on track and communicate in a professional manner. This may be especially helpful if you’re leaving your family’s long-time advisor or an old college friend. Chances are, they will respect your decision – especially if you clearly communicate your reasons, show that you have thought it through, and have a solid transition plan in place.
Be clear about your timeline for the account transfer so that they can stop trading in the accounts and issue management fee refunds, if appropriate. A typical transition can take up to 60 days, as there are usually residual dividends that need to be swept over to the new custodian.
And (as mentioned above), if you have an IRA, the best practice would be to have your current advisor initiate any Required Minimum Distributions (RMDs) since they already have all your information. This will make your transition more efficient.
Lastly, when parting ways, your current advisor should connect your new advisor with a service team member on the current advisor’s team who will assist with your offboarding. Typically, there is a client experience team or person who will handle transferring your accounts. It’s very valuable for the client experience team at your new advisory firm to have a point of contact at your old advisory firm if questions or issues arise.
What Happens After the Breakup with Your Wealth Advisor?
We all know it’s not always a clean break… sweatshirts get left behind; you must decide who gets the credit card points!
Here are some things your new advisory firm will be watching for after the breakup, and you should too:
- Initially, you will receive a deluge of paperwork in the mail. This is normal. You’ll receive mail from both custodians—old and new—to alert you that the assets are transferring out of one custodian and into another. This is a compliance requirement and to be expected. However, if you opt for ‘paperless’ communications, this will eventually subside, and you can view all your information in the client portal going forward.
- Make sure management fees are refunded back into your account(s), if appropriate. For example, if your management fees were billed monthly or quarterly in advance, you should expect to receive a prorated refund.
- Make sure residual dividends, interest, and cash transfer to the new accounts.
- Confirm cost basis has transferred to your new accounts.
- Plan on receiving two sets of tax statements in the year of your breakup—one from each financial institution where your money was held.
Let the Good Times Roll
Once all is said and done and the transfer has gone smoothly, you should start settling into your new relationship. Like all new relationships, this is an exciting time! Take a deep breath knowing that you’ve made the right move and you have someone who is acting in your best interests to safeguard and grow the wealth that you’ve worked hard to build.
During this honeymoon period—and beyond—your new advisor should be delivering on their value proposition and ensuring that you are well taken care of. And, if your new advisor happens to be Monument Wealth Management, we will have one special request for you: that we get to meet your dog! 🙂