Referrals from friends and family can lead you to a new potential advisor, but due diligence still matters.GETTY IMAGES
Early in his career, Rob Tétrault, senior investment and portfolio manager at Tetrault Wealth Advisory Group in Winnipeg, met with a business owner preparing to sell his company.
The entrepreneur was working with a branch-level advisor at his bank and he was not getting the comprehensive advice needed for a smooth sale.
Proactive estate guidance, relevant investment strategies and tax planning were nowhere to be found.
“I mean, that guy had hundreds and hundreds of clients. He didn’t have time to talk to anyone and was stretched too thin,” Mr. Tétrault says of the advisor.
While Mr. Tétrault makes it clear that bank advisors play an important role for people who are just starting out, as finances grow more complex, it’s easy for investors to outgrow their money managers.
After conducting a pre-sale review of the business, Mr. Tétrault identified planning strategies that would reduce the owner’s tax bill by roughly $1-million. The client left his previous advisor and signed on.
It turns out many Canadians are open to doing the same. According to EY survey data, 45 per cent said they expected to add, move or switch providers within three years. Lower fees were cited as a major reason for transferring assets, but they are not the only factor.
Irene Vassalo, a certified financial planner and principal at Vassalo & Associates Private Wealth Management in Kitchener, Ont., has been working with clients for 30 years. She says one of the most common reasons people contact her is a need for stability, something that can be difficult to find at the branch level of a bank or credit union.
“It’s that revolving door,” she says. “They are constantly having to retell their story. As soon as they build a relationship with somebody, that person leaves or moves on.”
Even if your advisor stays put, you may outgrow their investing approach. Perhaps they can’t give access to alternative investments. Or maybe it’s hard to get a straight answer on fees, or you suspect a conflict of interest when they push unsuitable financial products.
In other cases, they’ve messed up a registered retirement savings plan withdrawal (again), or you feel ignored. Sometimes the problem is as simple as a personality mismatch.
Jodi Wright, senior director and head of RBC Financial Planning, says all these situations may signal that the advisor relationship has run its course. “If you ever find yourself avoiding your financial advisors’ calls or not looking forward to meetings with them, those are usually signs something’s off in the relationship.”
Here’s what you need to know about switching advisors and finding the one that’s right for you.
Easier than you think
Moving money to a new advisor is often simpler than many people expect. In most cases, there are no longer proprietary restrictions or transfer fees, Mr. Tétrault says.
“Those are largely completely gone from our industry now. Thank god those are gone,” he says. “Clients don’t have to worry about paying these penalties or fees any more. Ninety-nine per cent of the time it’s not a thing.”
New technologies have made the process even smoother. Digital signatures through platforms such as DocuSign allow investors to authorize transfers quickly, without meeting in person or the hassle of scanning.
Find someone else first
Referrals from friends and family can lead you to a new potential advisor, but due diligence still matters. At the very least, Google the advisor and check regulatory websites to ensure there’s no history of questionable behaviour or disciplinary issues.
Then go to your first meeting prepared with questions. How often will they contact you? What expertise do they bring? Do they have experience working with advanced tax strategies, business succession planning, trust structures or anything else relevant to you? Be clear about what you expect and discuss fees openly.
Once you’re ready to move forward, gather and provide all your account statements, financial documents and tax records. You’re done. Your new advisor typically handles the actual transfer process.
Inform or not?
That’s right. They take care of it. Once you have your new agreement with your new advisor, you’re not required to inform the old one and have that uncomfortable conversation. They’ll eventually learn of the change when the transfer paperwork arrives.
If you’re leaving on good terms, however, a short e-mail or phone call would be a courteous gesture. “It depends on the relationship. If someone were to leave me, I’d appreciate a heads-up versus being blindsided with a transfer-out request,” Ms. Vassalo says. “But if there’s no relationship, there is no obligation.”
No guilt either
If you’ve had a long relationship with your wealth manager, you may feel some remorse about leaving. But if the fit is no longer there, making a clean, courteous break is what’s best for your financial future.
After all, you’re probably not the first client who has ever moved on.
“If you’re unhappy, or not getting the service or return you expect, look elsewhere,” Mr. Tétrault says. “There are a lot of really good, competent advisors out there. Transfers happen all the time, so there’s no need to fear it.”