Let’s face it, relationships can be hard. Whether it’s with your plumber, your significant other, or your financial advisor, there are many legitimate reasons you may want or need to leave them … and just as many reasons it’s tough to do.
So, what do you do once you’ve decided it’s time to “break up” with your current advisor? Try keeping the conversation professionally cordial, focusing more on the practical “how” than the gory details of “why.” Avoid getting mired in the emotions. From there, like many things in finance, it depends on you and your facts. Here are some common reasons people decide to break up with their advisors:
- If your financial advisor is a personal friend …
- If your financial advisor made an irreparable mistake
- If it’s just time to move on …
- General suggestions
If your financial advisor is a personal friend …
Focus on the relationship you have outside of your business relationship, emphasizing its value to you.
Clearly communicate the practical reasons a change is in order. Be candid and straightforward; remove emotions from the mix.
End with an “ask” to respect your decision. Let them know you’d like to prioritize your personal rather than professional relationship with them moving forward.
A sample script:
“First and foremost, thank you for all you have done for our family over the years. You’ve not only shown us care as our financial advisor, you’ve remained a true friend. That said, we have decided it is in our best interests to take a different approach to our financial life. As we move forward, we hope to remain good friends. Thanks again for your understanding and support.”
If your financial advisor made an irreparable mistake …
Be clear that the trust has been broken.
Communicate the specifics – not in anger, but in the spirit of helping them improve. For example, was it the mistake itself, or the way it was handled?
If you are unclear about ramifications, ask questions to better understand what occurred and how it might impact you long-term. (e.g., are there future tax consequences, etc.)
Press them to make you whole. An advisor’s mistake should not cost you.
If the advisor is uncooperative, consider what next steps you’d like to take to report and/or correct the issue. In case worse comes to worst, maintain a timeline and paper trail of your experience and conversations.
If circumstances warrant it, thank them for the services or individuals you have found helpful and positive. (It will mean the world to valued team members who have worked hard for you.)
A sample script:
“We wish to inform you we have made the difficult decision to end our relationship with your firm as soon as possible. As you may be aware, we have been frustrated by a service lapse under your care. We understand mistakes happen. But from our perspective, your firm’s follow-up was disappointing, and communications lacked the clear transparency we value. As a result, we no longer trust that you will be able to serve our financial best interests moving forward. Due to your mismanagement, we estimate we’ve incurred a cost of $XXX, and expect to be made whole in that amount. Please explain the process you will use to address this concern. We do acknowledge and appreciate that which your team has done for us in the past. Thank you for your continued support and understanding during our transition.”
Just broke up with your advisor and wondering how to pick a good advisor?
If it’s just time to move on …
- Thank them for what they have done for you and your financial life. Hopefully, you are in a better financial position than you would have been without their care.
- Clearly communicate why you are making a change, without injecting emotions into the mix. For example, are you moving to a more comprehensive planning firm who will provide tax projections and other services you’re not currently receiving? Did you find out your current advisor is not a fiduciary? Is your business growing, with your transaction-based broker ill-equipped to handle increasing retirement plan and ERISA-related questions?)
- Wish them all the best (if you mean it), and thank them for respecting your decision.
A sample script:
“First and foremost, thank you for all you have done for our family over the years. We are grateful for your advice, and the many ways you have helped us build toward financial success thus far. That said, we have decided it is in our best interests to take a different approach to our financial life. We hope you understand and respect this decision. We wish you only the best in business and life. Thank you again for your support through the years!”
Here are a few overarching suggestions for every scenario:
- Provide clear, direct feedback prior to “breaking up.” Unless your advisor has made irreparable mistakes or engaged in malfeasance, give them a chance to improve.
- IF your advisor asks for feedback or more information, provide as much as you feel comfortable sharing. A reputable advisor will want to improve moving forward.
- Do NOT let your former advisor bully you into staying, or throw up road blocks to prevent your departure. It is a big commitment to change advisors. Ideally, both your former and new advisor will assist with a smooth transition. If that’s not the case, disengage from the former relationship as quickly as possible. Let your new advisor serve as your liaison.
- Above all, remember: Your financial advisor should serve your highest financial interests, even ahead of their own. Communicate what your needs and interests are. Stay in a relationship that fulfills them. End any relationship that does not.
- A reputable advisor with this stance, and help you move on to a different advisor if they are not the best fit for you. They will support your decision and transition, even when it is hard for them to see a valued client move on.
Whether in your personal or professional life, good relationships are hard to find. If you are happy with the care and service your advisor is providing, let them know. Everyone loves positive feedback! That said, an ill-fitting advisory relationship can cause lasting damage to your family’s financial well-being. If your financial advisor is no longer serving your best interests, breaking up with them may be the healthiest move you can make.
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
This post was written by a member of the Plancorp Women’s Initiative, which strives to advocate for clients and women in the community by addressing topics specific to their financial lives. For more information about the Women’s Initiative and how you can get involved, email email@example.com or visit the Plancorp Women’s Initiative page.