The markets continued to climb last week, with the S&P 500 briefly setting a new all-time high before retreating slightly. Corporate earnings and profits continue to grow, providing solid reasons for stock prices to rise.
We received a question last week about breaking up with your financial advisor. The process can be fairly easy. For most investments, a simple form will transfer everything to a new account with your new firm. You sign account applications to open new accounts, and the transfer forms are part of that set of documents.
If you have proprietary investments, those cannot be transferred. These are investments that are only sold by a specific company and are used to lock you in to continuing to work with that firm. Those investments will have to be sold, and that may come at a cost. The firm may charge a commission or trade fee to sell. If it is in an annuity, there may be a surrender charge depending on how long you have owned the product. And if it is not in an IRA, there may be tax consequences. Your new advisor should be aware of these issues and work with you to structure the move to minimize any costs from your previous firm.
The actual transfer of assets is the easiest part. The harder part comes in communicating with your current advisor. I would always recommend discussing your concerns with your advisor before you start looking for someone new. Your current advisor may be able to meet more often, provide comprehensive planning, or change investment strategies, if those are your concerns. If you’re still not getting what you want, disagree with the advice you are receiving, or have other concerns, you may want to look for another advisor.
It’s your decision to communicate the move to your old advisor. If you have worked together for some time, a phone call or email explaining why you are leaving is appreciated. It is helpful for any business to learn why a client is leaving, so that they can correct mistakes or improve operations going forward. Your former advisor should take the news professionally and thank you for letting them know and giving them feedback. They should also be available to help with the transfers if anything is needed, but they are not the ones to initiate the transfers – it’s a pull from the new firm, not a push from the old firm.
At the end of the day, it’s your money and you should work with an advisor who provides the advice you need at a reasonable cost.
Your action item this week is to run a broker check on your current advisor at finra.org. Terminations, regulatory suspensions, and fines are huge red flags.
If you have a question you want answered, email us at info@covingtonalsina.com. Be sure to check out our Facebook page or website to see our upcoming educational events.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.