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How to fire your financial adviser

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“We’ve been thinking of leaving our financial adviser for a few years. But if we left, we didn’t know what to do with our accounts?” That is a comment I commonly hear from new clients. There is no need to stay with a financial adviser you are not happy with just because you don’t know what to do next. You can fire your financial adviser and take the next steps to transfer your accounts.

The most important thing to know is to start the process with your new brokerage firm. Let’s say you are currently working with a full service brokerage firm like JPMorgan, Merrill Lynch, Wells Fargo Advisors or Morgan Stanley. You have decided to leave them and want to transfer your accounts to a discount brokerage firm. All you need to do to leave your current adviser is to go to the discount brokerage firm of your choice and complete the paperwork.

Once you send in your completed transfer forms to your new brokerage firm, they will contact your current brokerage firm to initiate the transfer of your accounts. Your current adviser will be notified during this process that you are leaving.

That may not be the best way to notify your current adviser. I would suggest an email or phone call to let them know. It really is a personal choice and what feels right for you. Just don’t let this uncomfortable task keep you from making decisions about your investments and retirement. Remember, it is your money!

Before filling out that transfer paperwork, you need to decide on a new brokerage firm. There are many discount brokerages that desperately want your business. A few suggestions for you to research include Vanguard, Schwab, TD Ameritrade, E-Trade and Fidelity. Any of these firms will bend over backwards to help you transfer your accounts, so don’t worry about not understanding everything right now.

Once you decide on where your accounts will go, download the appropriate form from the discount brokerage Web site. For instance, an IRA will use an IRA rollover form. A brokerage account will use a brokerage transfer form. Call the customer service line if you have questions on which form you need.

These forms will ask if you want to transfer your investments “in-kind” or to liquidate and invest in new investments. Find out if your current brokerage firm will charge transaction fees if you liquidate your current investments. If they are going to charge you, it will be better to transfer them “in-kind”. Once everything is transferred to your new brokerage, you can sell your current investments and buy something new.

One thing to watch out for is possible fees and taxes when leaving your current adviser. You may have investments in private REITs or variable annuities that won’t transfer to your new brokerage firm. Private mutual funds that are linked to your current firm may not transfer as well. You’ll need some help with these situations. There is a way out of these expensive products, but it is a little more complex than transferring a mutual fund or stock.

There is help if you need it to choose new investments or understand any exit fees or taxes that may be due. You can find fee-only advisers you can hire by the hour at garretplanningnetwork.com and NAPFA.org. Full disclosure – I am a member of both these organizations.

There are many reasons why someone may want to fire their financial advisor. Maybe you are upset about high fees, bad customer service or you just want to take control and do-it-yourself. Whatever your reasons, just know that it is not that difficult to end the relationship and move your accounts.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.



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Posted by on Jan 16, 2014. Filed under The Money Shot. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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