What to Do When Your Financial Advisor Changes Firms

Pen and paper for note taking on a table with a keyboard.

It’s not uncommon for financial advisors to change firms. While some changes come about due to retirement or other personal reasons, many are simply the result of seeking out new opportunities. For clients, deciding whether to stay with an advisor who has changed firms can be a difficult choice. Clients must take the time to evaluate their current portfolio, evaluate their potential new financial advisor, investigate what new options they would by switching, how much it would cost to switch, and so much more.

Here are a few questions to ask yourself and consider when making this important financial decision.

What Is the Cost of Changing Financial Advisors?

Considering the average financial advisor costs roughly 1% of assets under management (AUM), it can be expensive to switch financial advisors. Along with the direct fees associated with changing financial advisors, indirect costs can include lost opportunities for compound growth.

Taxation is another important consideration when changing advisors. Any gains acquired from selling investments will be subject to capital gains taxes, which can eat into investment returns.

For these reasons, it’s important for investors to carefully consider the costs and benefits of changing financial advisors before making a decision.

What Are the Benefits of Changing Financial Advisors?

Investors unhappy with their current financial advisor may find they can achieve better results by switching to a new one. Similarly, those who feel their needs aren’t being met by their current advisor may determine that a change is necessary to get the kind of service they require.

Another potential benefit of changing financial advisors is that it may give investors access to new investment opportunities. While most financial advisors have access to a limited number of investment products, some have relationships with multiple firms and can offer their clients a wider range of investment choices.

Finally, investors unsatisfied with the fees they’re currently paying may be able to negotiate a lower fee structure with a new financial advisor.

How to Evaluate a Financial Advisor
Whether you stay at the same firm or look for someone new, here are a few questions investors should ask themselves:

  1. How will our relationship work? In other words, how much access will you have to your new advisor if you stay at the same firm? Will your relationship change with your existing advisor because of their switch?
  2. How will you get paid? Advisors use a variety of fee structures. Should you make the switch and follow your existing advisor, will their fee structure change?
  3. What tax hit do I face if I invest with you? This question helps ensure that your new or existing advisor has your tax bill in mind when they make financial decisions. Asking about taxes and fees may help you estimate what your net return might be.
  4. What are your qualifications? Should you stay at your existing firm, do you feel confident that you will be in good hands? You should also investigate whether a finance professional goes by “investment advisor” or has the CFP® designation.
  5. What’s your investment philosophy? You probably already know the answer to this question for your current advisor. However, it’s important to ask this question as you get to know the new advisor you would be working with should you decide to stay at your current firm.
  6. Who is your custodian? Should you decide to follow your advisor, this is an important question to ask. Ideally, your advisor will have an independent custodian, such as a brokerage, to hold your investments. By doing so, you can verify the amount an advisor says is in your account vs how much really is via a quick double-check online.
  7. What asset allocation will you use? Asset allocation is the key to creating a diversified portfolio. Will your portfolio only include U.S. large-company stocks? Or, will it include domestic and international stocks from small, mid, and large-cap companies?

Other Considerations

Investment Returns

Investment performance is one of the most crucial factors when evaluating a financial advisor. If your current financial advisor has performed well, there may be no need to make a change.

Investment Mix

Another factor to consider is whether you can keep the same investment mix if you switch advisors. This is important because changing your investment mix can significantly impact your portfolio.

Length of Relationship

If you’ve worked with your current financial advisor for a while, you might want to stay put. Long-standing relationships can be beneficial, as they offer continuity and allow the financial advisor to get to know you and your goals well.


Trust is an important element of any financial relationship. Your financial advisor manages your money and makes important decisions on your behalf. If you don’t trust them, it may be best to try someone new.


Make the most of all the free tools that are available to you online. One of the best tools that consumers can use is FINRA’s BrokerCheck database. Here, you can research the background and experience of financial brokers, advisors, and firms. This is also a great tool to check if an investment advisor is registered with the Securities and Exchange Commission (SEC)

How to Tell Your Financial Advisor You’re Leaving

If you decide to part ways with your current financial advisor or the new advisor that you have been handed off to, it’s important to do so professionally. These tips can help ensure that you’re tactful about telling your financial advisor you’re leaving.

Schedule a Meeting

First, schedule an in-person meeting with your financial advisor. This will allow you to have a face-to-face conversation with them and give you both a chance to ask questions or provide clarification.

Be Direct

Be forthcoming about your decision. A certain level of respect and honesty are necessary. In some cases, you may find that your cause for concern was based on a faulty assumption.

Give Notice

Make sure you give your current advisor adequate notice before bowing out. Doing so will give them time to transition your account and provide you with any necessary documents.

Follow Up in Writing

Once you’ve told your financial advisor you’ll no longer be requiring their services, follow up with a formal letter. This message will provide documentation of your decision and ensure there’s no misunderstanding between you.

Establishing a Relationship with Your New Advisor
Should you decide to stay at your current firm, here are a few things you may consider to have more confidence in your decision.

Set Expectations Early

Setting clear expectations is important when you first start working with a financial advisor. This includes discussing your investment goals and risk tolerance. By doing this, you can avoid disagreements down the road.

Review Your Accounts Regularly

Ask your advisor to go over the details of each of your accounts with you regularly. A periodic review will help you keep track of your investment performance and ensure that the expectations you laid out are being met.

Keep Good Records

Vital record-keeping tasks include maintaining copies of all documents and communications with your financial advisor. This kind of paperwork could prove useful in the future.

What to Do with Investment Accounts

If you’ve resolved to split with your current firm, you’ll need to decide what to do with your investment accounts. Here are a few options to consider.

Transfer Them

Perhaps the most straightforward option is to transfer your accounts over to your new financial advisor. This can be done by completing a transfer form and sending it to your advisor.

Close Them

Another option is to close your accounts entirely and start fresh. This may work for you if you need time to get a new financial advisor lined up or are no longer comfortable investing.

Leave Them As-Is

If you have a good relationship with your current firm and you feel comfortable you’re your new advisor, you may choose to leave the accounts as is. This option may be beneficial if you’re happy with your current investment mix and want to avoid going through the hassle of transferring the accounts.

Ultimately, only you are qualified to decide what happens with your accounts. Just make sure you consider all of your options before making a final call.

Ultimately, the Choice Is Yours

So, should you stay or should you go? You’ll find so many different answers to this question across the Internet, but ultimately, you are the only one who knows what is best for you. No matter which route you choose, always remember that you are the only one in charge of your financial future. While there are trained professionals who can offer you guidance, at the end of the day, you are the one who makes the choice.

Maybe you’re new to investing and your advisor suddenly changed firms. Or, perhaps you have some other financial goal in mind and your current advisor isn’t meeting your needs. In any case, our team at Good Life Mt. Pleasant is here to examine your situation from a holistic financial perspective. If you’re in the process of interviewing potential financial advisors, contact us for a free one-on-one consultation. We hope to welcome you to the Good Life soon!

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.