I pay 1% to my advisor, but “the only communications I receive are invoices”. So I want to regain sole control of my accounts — without having to tell him. Is it possible?
Question: Eight years ago, I hired a financial advisor because rounds of layoffs at work were happening more regularly and I wanted to know if my savings were enough to retire. The financial advisor started managing some of my accounts for me for a 1% fee. It’s been a significant amount per year, but the advisor has helped me prepare for and manage retirement, moving across the country, and buying a new house/selling the old one, so I was happy for the most part. But my original advisor retired and I was assigned to a new person, who never emailed or phoned me to introduce himself or learn anything about me. The only communications I receive are the quarterly bills for fees and email from the receptionist to schedule a meeting. (Looking for a new advisor? This tool can help you find an advisor who might meet your needs.)
I let this last during the pandemic because I did not really have the mental capacity to face it, but now I want to regain control of my accounts and manage them myself-maybe consultation with an advisor possibly paying. Retired, the fees of the financial advisor were my biggest annual expenditure, more than my taxes and more than my land taxes in a very expensive region and I no longer have the impression that it is worth paying fees as high.
I have called the financial company several times that hosts my accounts to ask him how I can regain exclusive control of the accounts managed by professionals, but I cannot find someone who can tell me how to do it. They seem puzzled and say they don’t know what I mean by “professionally managed account”, even though that’s how they are identified in my records. Am I using the wrong terminology? It seems that this should be a simple question, such as filling out a form for each account, because this is how we have configured it to be managed in the first place, but I cannot find the right form. I would like to avoid calling the financial advisor and asking them to do so if possible. Any ideas on the best way to do this?
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Answer: First, let us help you regain control of those financial accounts, then we’ll figure out how to find you a new financial advisor, if you want one. When you want to end your relationship with the financial company that holds your accounts, the language you should use is that you want to remove the trading authority of the advisor and move your account from the institutional advisor platform to a retail account self-managed, explains the financial planner. Joe Favorito of Landmark Wealth Management. Basically, an institutional advisor platform is just the trading platform that registered investment advisors like Charles Schwab & Co, TD Ameritrade, and Fidelity have access to. A self-directed retail account gives the investor the ability to trade stocks, mutual funds, and ETFs on their own. To make sure you’re prepared when you request the change, have your account numbers, company name and advisor’s name ready when you call.
There are often management contracts that exactly specify how to put an end to your relationship with your advisor, so that experts recommend refer to all the documents you may have signed initially. Before making the switch, you might also consider requesting copies of your statements or any other transaction-related documents your current advisor may have. Other than that, you don’t need to have a long breakup conversation – there aren’t many strings attached to a relationship like this, and as long as you don’t have any questions or pressing concerns for your current advisor, you can switch to controlling your self-directed account without looking back.
“I would find another institution that is clear on your goals, then institute transfer documents to transfer the assets to your new account. Make sure he moves from one institution to another so as not to take possession of the money, [because] If you do, this could become a taxable event and train a few additional steps to initiate a 60 -day bearing with your taxes, “explains the approved financial planner Don Grant at Fortis Advisors. And make sure that the financial institution where your funds are currently found “liquids the positions before sending the money on the new account, otherwise you may have to pay fees to liquidate once in the new institution”, explains Grant. Beware of transfer fees that could support your transfer and any tax impact, such as having to pay capital gains on cash transfers or tax implications that occur during the transfer of retirement accounts.
The next step is to consider whether or not you want to hire an advisor to help you manage these accounts. (Looking for a new advisor? This tool can help you find an advisor who might meet your needs.) [financial] problems on your own,” says Favorito. But one thing is clear: your current advisor does not meet your needs. “There are plenty of independent financial advisors out there who not only offer more engaging and comprehensive services, but also alternative fee structures,” says Certified Financial Planner Kevin Cheeks at ImpactFi – who says resources like NAPFA, XY Planning Network or Fee-Only Network might be worth looking into.
And instead of the percentage of assets under management model you were using, you might want to try something else. Cody Garrett, certified financial planner at Measure Twice Financial, explains that some advisors provide comprehensive planning without managing clients’ investments. “This service model and this terminology are only advice and seem perfectly suited to your expectations. Although a advice planner only does not manage customer investments, it provides specific investment advice to help you manage your own accounts,” says Garrett. Here’s what hourly and per-plan advice could cost you.