5 Signs It’s Time to Change Financial Advisors - NerdWallet (2024)

When it comes to your financial advisor, breaking up can be hard to do.

Changing financial advisors can feel “almost the same as splitting up” a romance, says Patricia Jennerjohn, a certified financial planner with Focused Finances in Oakland, California, as the intimacy of financial knowledge can be deeper than the bonds of marriage.

“I’ve had people tell me things they haven’t told their wife or husband,” adds Celia Brugge, a certified financial planner with Dogwood Financial Planning in Memphis, Tennessee. “One client was diagnosed with cancer, and I was the first person they told because the first thing on his mind was, ‘how will I pay for treatment, and how will that impact my family?’”

While performance of your retirement savings over time is an obvious metric by which to judge your financial advisor, the relationship often ends for more emotional reasons, experts say. Here are some signs it’s time to cross your financial advisor off your Valentine’s Day card list.

1. You’re afraid to call your financial advisor

If you’re having trouble picking up the phone to ask a financial question, that’s a bad sign. “If you’re not calling because you don’t think your concerns are important, or you feel like, ‘they’re too busy — I don’t want to bother them,’ those are big red flags,” Jennerjohn says.

Ask yourself, why are you afraid to call? If past calls weren’t promptly returned, or the conversation felt rushed once you connected, then it may be time to examine whether this is working out. “Some may feel like they are small potatoes compared to their advisor’s other [wealthier] clients … but you shouldn’t feel that’s a problem,” Jennerjohn adds. “This is all the money you have in the world, and that deserves full attention.”

» Ready to move on? Compare the best personal financial advisors

2. Your financial advisor doesn’t listen to you

Jennerjohn has a client who is two-timing with her because she can’t work up the courage to break with her other financial advisor. “My client says, ‘I make requests and suggestions, but he just brushes me off,’” she says.

It’s kind of like, ‘don’t question the doctor, just take the prescription.’ They feel intimidated to stay with this person.

Patricia Jennerjohn, Certified Financial Planner

Often, clients can be overawed by a fancy suit and office, and a barrage of smart-sounding advice that goes right over their heads. “It’s kind of like, ‘don’t question the doctor, just take the prescription’,” Jennerjohn says. “They feel intimidated to stay with this person.”

» What should you expect? Learn more about what financial advisors do.

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3. Your financial situation is changing, but the advice isn't

Similar to not hearing you is not changing financial tack when a major life event is on the horizon, such as retirement. Some advisors get stuck in “accumulation phase,” Brugge says, rather than preparing for the time when your investment savings replace a steady paycheck.

“You’ve been saving all this money, but it’s in different pots of money — some may be in taxable accounts, maybe you’re remarried and you’ve got his-and-her money,” Brugge says. “How do you decide what to take out, when, and in what order should the accounts be used? Those become the big questions now.”

4. Your financial advisor only calls to trade

Another red flag: You only hear from your advisor when they want to execute a buy or sell order on your portfolio. That may be a sign your advisor is only interested in the fees they may pocket by trading on your account, Jennerjohn says.

It’s important to understand how your current or future advisor makes money. Some make money by receiving a commission on products they sell; others charge clients a percentage of the assets they manage (typically around 1%). Many clients prefer a fee-only advisor, who charges an hourly rate or a flat fee for services, and isn’t inclined to steer you toward a fund they get additional cash to sell.

» Learn more about how much financial advisors cost

If you feel your advisor is only looking to make a quick buck off you, it may be time to say so long.

5. Your eye is already wandering

If you find yourself listening to other financial advice, or looking at your advisor contract with a critical eye, you’re probably ready to make a break.

Emotionally, breaking up with a financial advisor or financial consultant may be hard to do. Legally, switching financial advisors is pretty straightforward: Sign an agreement with your new firm, and notify your old advisor. However, there may be some financial ramifications. Check your old advisor’s contract to see if there is a termination fee, which you’ll need to pay. There also may be additional costs or tax ramifications if you are moving assets from funds managed directly by your old advisor’s company.

Regardless, if you’re not feeling fulfilled in your current advisor relationship, remember: You can always leave.

“A financial advisor relationship inevitably gets into more than numbers … it can be incredibly close,” Brugge says. “It’s an awesome responsibility, and our clients deserve our best.”

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5 Signs It’s Time to Change Financial Advisors - NerdWallet (2024)

FAQs

5 Signs It’s Time to Change Financial Advisors - NerdWallet? ›

Poor performance, high fees, strained communication and stagnant advice are among the reasons to look for a new advisor.

What is a red flag for a financial advisor? ›

On the other hand, fee-based or commission-based compensation structures can both be financial advisor red flags. These advisors may earn part or all of their compensation in sales commissions. In other words, they may be more incentivized to sell products than give advice.

When to leave your financial advisor? ›

But these professionals are only as good as the service they provide their clients. If your financial advisor isn't paying enough attention to you, isn't listening to you, or is confusing you, it may be time to call it quits and find a new advisor who is willing to go the extra mile to keep you as a client.

How often do people switch financial advisors? ›

How often do people switch financial advisors? People often switch financial advisors when they experience significant life changes or feel their current advisor is no longer suitable, but there is no set frequency for making such a change.

How do I know if my financial advisor is bad? ›

If you feel your Financial Advisor evades or ignores questions, changes topics frequently, or avoids details about commissions, then it could be worth considering if they are a good fit for your needs. Every advisor should make a good faith effort to help you understand all aspects of your plan.

What to avoid in a financial advisor? ›

These 10 statements can help you identify an advisor who is better to walk away from:
  • "I offer a guaranteed rate of return."
  • "Performance is the only thing that matters."
  • "This investment product is risk-free. ...
  • "Don't worry about how you're invested. ...
  • "I know my pay structure is confusing; just trust me that it's fair."
Mar 1, 2024

How do you know when to fire your financial advisor? ›

We've outlined some legitimate concerns that may justify a breakup and some that you may want to re-think:
  1. Poor Communication. ...
  2. Lack of Availability. ...
  3. Bad Financial Advice. ...
  4. Failure To Listen. ...
  5. Too Focused on Investments. ...
  6. Less-Than-Satisfactory Results. ...
  7. Not Worth the Money.

Who is the most trustworthy financial advisor? ›

The Bankrate promise
  • Vanguard.
  • Charles Schwab.
  • Fidelity Investments.
  • Facet.
  • J.P. Morgan Private Client Advisor.
  • Edward Jones.
  • Alternative option: Robo-advisors.
  • Financial advisor FAQs.

How often should you hear from your financial advisor? ›

“There are years you talk to your adviser every month, and there are years when a single check-in is completely appropriate. I think 2-3 times a year is a good average,” says Jen Grant, a financial planner at Perryman Financial Advisory.

How long does the average client stay with their financial advisor? ›

For instance – did you know that according to a study1 from Etrade Advisor Sales in 2019 – the average percentage of clients that leave during a given year is 20% within a year. And 25% within one-two years. Or - put another way - roughly one-fourth of new clients may leave within the first two years.

Is it OK to have two financial advisors? ›

Yes, you can have more than one financial advisor. There are no rules saying that you can't work with multiple advisors. For example, you might use a financial advisor for general financial planning and an investment advisor specifically for managing your investment portfolio.

How do you tell your financial advisor you are leaving? ›

You can either call or email your advisor - but letting them know you're leaving and why is a nice thing to do. Your new advisor will actually do all the work of transitioning the accounts for you. A simple email like this would work great...

How long should you keep a financial advisor? ›

“If judging performance only, clients need to give an advisor three to five years minimum, and realistically, five-plus is probably better,” said Ryan Fuchs, a certified financial planner with Ifrah Financial Services. “It may take several years before you can truly see how an investment strategy will work.

What to do if you are unhappy with your financial advisor? ›

You're paying for a professional service, and if you're not satisfied, it's time to make a change. Notify them, on your terms: While it's not technically required, you should politely and respectfully inform your advisor that you're making a change. Keep it brief and professional.

Should you tell your financial advisor everything? ›

The more you share with your advisor, the better they'll be able to do their job and help you optimize your financial life.

What is unprofessional behavior for a financial advisor? ›

Unethical financial advisors usually have warning signals including inconsistent reporting to clients, product pushing, and guaranteeing future results. Ethical financial advisors prioritize learning about your personal history, explaining unfamiliar financial matters, and planning for their succession in they retire.

What is the red flag in finance? ›

A red flag is a warning or an indication that the stock, financial statements, or news reports of business pose a possible issue or a threat. Red flags can be any undesirable characteristic which makes an analyst or investor stand out.

What is the red flag rule for financial institutions? ›

Under the Red Flags Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs – or “red flags” – of identity theft.

How do you know if someone is a good financial advisor? ›

They have a passion for the subject and are curious about their clients and the changes in the industry.
  • Passion for Financial Planning and Wealth Management. ...
  • Deep Analytical Ability. ...
  • Ability To Market Yourself. ...
  • Putting a Client's Interests First. ...
  • Curiosity.

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