Is your advisor breaking up with you?
If you’re aware that your advisor is retiring, they’ve likely already picked a replacement. But that doesn’t mean you should settle for whoever bid the most for their book of business.
Whether you know it or not, you and your assets are a commodity. Not in the way you’re thinking. A commodity to your Financial Advisor. The financial Advisory business values the worth of an Advisor and his business based on the size of his/her book of business and/or the revenue that’s created.
Financial Advisory is a relationship business. As it should be. No one gives money to someone because they’re good looking, or because they shoot subpar golf. (If that were the case, I’d be the only Advisor with assets in the city of Melbourne.) People select an Advisor and choose to stay with that Advisor based on the trust that is built over time. You trust that your Advisor has the knowledge to invest for you and has your best interest front and center.
So, what happens when your Advisor retires? Probably one of a couple of things:
- They put a transition plan in place (usually over a few years) to hand off the day-to-day management of your account to a junior partner in the same office. The Advisor has more than likely worked out a buyout of his business or entered a transition plan with his firm that will entail a payout to the Advisor in either a lump sum or over a period of time.
- The Advisor switches firms with the intention of bringing over his clients and then transitions to retirement in a few years. When an Advisor switches firms it can be for a number of reasons, but one of the most common reasons is the Advisor received some type of compensation for that transition. It’s a competitive marketplace and movements between the big brokerage houses is not uncommon.
What do you do at that stage?
Always remember that this is your money. Not theirs. Although they may treat you as a commodity, no one cares more about your money than you do. You have options. Just because your Advisor has selected someone to take over for him/her doesn’t mean you have to accept it.
When this happens, treat it as an opportunity to get another set of eyes on things and get a second opinion. Ask your trusted friends who they’d recommend. Go on a couple of dates…swipe left or right on a few Advisors around town. I know, the thought of “dating” again scares the wrinkles right off of me. Going with an advisor your previous advisor selected for you sounds a lot like an arranged marriage…might work out, might not.
Do some research. We advisors all have digital footprints these days. Do they have a cookie cutter website with their firm’s opinions, or do they outline their own process and detail their personal thoughts on the market? What fees do they charge and how do they charge them? Do they send your money to a third party or sell investments with high commissions? Advisors don’t all charge the same fees. This is why you need to do your homework.
Break ups are hard. Nobody wants to start over. But imagine your ex picking your new mate for you…yikes. Look at this as a chance to find an advisor better suited for you and your investment goals. Who knows, maybe it will be the best thing that ever happened to your portfolio.
If you’re not sure where to start, feel free to shoot me an email or give me a call to discuss. I’m the type of advisor that will tell you if we’re not the right fit for each other. Believe it or not, I swipe left all the time…and you should too.
Mick Graham, CPM®, AIF®
Branch Manager Raymond James
Financial Advisor Melbourne, FL
Any opinions are those of the author and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
