5 Key Signs You Need To Break Up With Your Financial Advisor and How To Do It

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According to data from the U.S. Bureau of Labor Statistics, there were over 272,190 positions in financial advisor jobs in 2023. This means that you don’t have to feel like you’re stuck with your current financial advisor if you’re not satisfied with their services. You can find a new financial advisor to help you manage your money and reach your various goals. If your current advisor isn’t helping you reach your financial goals, then it’s time to move on.

Here are five signs that signify you need to choose a new financial advisor.

Sales-Driven Recommendations Instead of Personalized

If your financial advisor keeps recommending investments that are seem to be driven by sales instead of focused on your goals, you may want to cut ties since they’re not acting in your best interest.

“If you feel pressured into financial products that don’t fit your needs or long-term plans, that’s a clear indication the advisor’s priorities may not align with yours,” said Reilly Renwick, chief marketing officer of Pragmatic Mortgage.

You want to work with an advisor you can trust and offers recommendations you know they believe in. Since you work hard for your money, you want to ensure your funds work for you. You don’t want to find out that your advisor steered you in the wrong direction because they were trying to earn a commission from a product they didn’t fully back.

Your Portfolio Is Underperforming

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Renwick said a red flag to look out for is if your portfolio underperforms compared to benchmarks. You can compare your portfolio to the S&P 500 or other funds, that way you have something to help you measure how your investments are doing.

“While market ups and downs are normal, persistent underperformance without explanation or adjustments is a cause for concern,” added Scott McBrien, chief investment officer of PNTHR Funds and founder of The Laser. “A competent advisor regularly evaluates your portfolio and makes changes as needed.”

If your portfolio has consistently underperformed based on expectations and benchmarks, you should consider terminating the arrangement with your advisor. You want to find an advisor who will help you grow your funds by creating a portfolio that consistently delivers. 

Your Advisor Doesn’t Seem Involved

“Consider leaving your financial advisor if they’re unresponsive, provide infrequent updates or fail to actively manage your portfolio,” said Chad Olivier, certified financial planner (CFP) and CEO of The Olivier Group. “If your advisor isn’t actively managing your accounts or adapting your strategy to market changes, it may indicate a lack of attention to your financial growth.” 

If you feel that your financial advisor isn’t addressing all aspects of your financial life, it may be time to find one who can better meet your needs — you want to have all of your money-related matters handled by a qualified professional.

Excessive or Hidden Fees

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High or undisclosed fees can eat into your returns, especially if your advisor wasn’t upfront about the costs involved. “If your advisor isn’t transparent about their charges or their fees seem unreasonable compared to industry standards, it may be time to explore other options,” McBrien explained. 

You don’t want to pay more fees than you originally expected to, so it’s important that you review any costs you’re incurring for financial services. If you discover any hidden or excessive fees, this could create distrust and you’ll want to look into other options for financial advice. 

Misaligned Goals

McBrien said as your financial situation changes, your advisor should adopt strategies to reflect this. “If they’re unwilling to adjust or dismiss your input,” he said, “they may no longer align with your needs.” Just because a financial advisor served you when you were starting off in your career, it doesn’t mean that you have to stick with them as you advance. It’s OK to outgrow a financial advisor and seek out someone who can help with your current situation. 

Ways To Break Up With Your Financial Advisor

Below are some steps you can take to end the business relationship with your financial advisor. 

Review Your Agreement

“Ending the relationship also starts with reviewing the agreement you signed to understand any terms regarding termination,” Renwick said. You want to start by going over your agreement to see what the process for terminating the relationship is like. 

Research a Replacement

It’s a good idea to find a new advisor before you end the relationship with your current one. Look for professionals with certifications like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA) and read reviews or seek referrals.

Notify Your Advisor

The next step is to provide written notice to your current advisor to inform them that you’re ending the agreement. You can keep the communication professional and concise, because you are not required to explain yourself. 

Monitor the Transition

To avoid disruptions, it’s crucial to ensure you have access to all your financial records and accounts during the transition. Double-check to confirm that all assets and accounts were transferred smoothly. Verify with your new advisor that the process is complete and that you’re ready to get started.

“Your financial advisor should be a reliable partner in reaching your financial goals. If the relationship isn’t working, don’t hesitate to make a change,” McBrien said. “By transitioning to a new advisor who aligns with your needs, you can restore confidence in your financial journey and ensure your wealth is in capable hands.”