NEW YORK, Oct. 6, 2020 /PRNewswire/ -- When a person hires a financial advisor, they do so in the hopes of improving their financial situation and feeling more empowered. Unfortunately, not all financial advisors are able to deliver on these goals. Clients may be unhappy with their financial advisor for a number of reasons, such as lack of communication, pushing investments that are too expensive or have dubious commissions attached, weak portfolio performance, or even strong differences in opinion. When this happens, the client may decide to fire their financial advisor. Although it may feel intimidating, there is a process that should be followed when firing your financial advisor. This includes reading the advisor contract, firing the advisor, collecting investment records, asking about sales charges, and making a plan for the future. This can all be done with the help of an advisor from the Zoe Financial network.
Read the Current Advisor Contract
The most important part when letting go of a financial advisor is to review the contract or advisory agreement. These documents should have a clause about how to terminate the contract. Many times, it states that the client is required to give a signed letter to their advisor stating that they want to end the contract. More importantly, the client needs to look for the section that declares if there are any termination fees. Some contracts make you liable for all of the annual fixed fees. Other contracts may allow you to pay a penalty to terminate the contract early.
Fire the Advisor
Just like a breakup, this is often the most uncomfortable part of the process. There are different ways to relay the message, such as a letter, call, or email. Even if the client decides to call them to break the bad news, they still have to adhere to the rules of their contract, as stated above. When this happens, the financial advisor will probably try to convince them to change their mind. For anyone going through this, remember to keep your financial goals in mind and stay firm with your decision.
Collect Investment Records
Financial advisors are legally required to transfer their clients their security historical records. If the client is transferring taxable investment accounts, they should also keep personal records of the cost basis of these securities. This amount will be included in their transferred accounts, but it never hurts for them to have it in their own records. The reason being is that this information is required when filling out income taxes.
Ask About Potential Charges and Fees
When a client transfers their accounts, they should ask if there are any sales charges. Some investments have contracts that lock them down for a specific set of time. Other investments may be exclusive to an advisor's firm. Investments with these types of restrictions usually have transfer fees. For example, if a client has an annuity contract that's owned by their old firm, this means that the client will have to cash it out before it can be reinvested. This can cost up to 10% of the contract's value; this is called a deferred sales charge. This is just one example, but there are other sales charges that may be mandatory. It's best to know ahead of time as a client in order to plan for the expense.
Make a Plan for the Future
If the relationship between a financial advisor and their client doesn't work out, the client should create a new plan. The first option that they have is to start managing their own accounts. While some people prefer to do this, many problems can arise. Most people don't have the expertise that financial advisors have in terms of helping clients manage market uncertainty, estate planning, retirement planning, and tax strategy. The second option is to hire a new financial advisor. The benefit of this is that a fiduciary financial advisor can help manage the entire process of firing a current financial advisor and transferring the client's portfolio, so all they have to worry about is getting onboarded with the new advisor moving forward.
Zoe Financial's Network of Advisors
It may seem discouraging to hire a new financial advisor after a failed attempt. That said, the right financial advisor can evaluate each unique situation and make an accurate plan. This plan will include the client's budget, investments, retirement plans, short and long-term goals, and every other small detail.
Zoe Financial knows how important it is to be matched with the right financial advisor, which is why they spend so much time in the hiring process. Zoe only hires the top 5% of advisors by selecting them based on credentials and education, experience, quantitative and qualitative assessments, and whether or not they are fiduciaries. Their long selection process gives their clients the confidence that Zoe's network of financial advisors are qualified to do the job.
Zoe's award-winning algorithm matches clients to the financial advisors that best suit their situation. For instance, if a client wants to focus their financial plan on employee stock options, Zoe's algorithm will match them with an advisor that has experience in that specific area. After the client is matched with an advisor, they're encouraged to schedule a free consultation call to interview them. This helps them build a relationship and decide whether or not it's truly the right fit for them.
Just because one financial advisor didn't work out, doesn't mean that the next one won't. If you decide to fire your financial advisor, Zoe's matching service can help you find an advisor who understands you and empowers your relationship with your finances.
About Zoe Financial
Zoe Financial's award-winning algorithm enables individuals to discover and connect with highly vetted, top fiduciary advisors in their area. All financial advisors in the Zoe Network are vetted and verified fiduciaries, along with having top credentials, education, and experience. Zoe's service provides support from start to finish during an individual's financial advisor search. All consultation calls and interviews with Zoe's network of advisors are completely free and are offered via video chat or traditional phone call depending on an individual's preference.
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