Rich On Money

Financial Advisors

This is not all that easy a question. You have to make a decision as to how much of the success in your account was due to the advisor and how much was due to the firm? My first impulse is that if you have a really great relationship with your advisor, it is going to be very difficult to replicate that relationship with someone new that you have no rapport with. Trust is a very difficult thing to build with a human being, and once established, it must be respected and built upon.

In my industry which is the financial services industry, about 12% to 13% of the industry moves every year. If the financial advisor is moving to a well established firm, or a bigger firm, than the move might be very beneficial to you as the client, as well as the advisor. You need to discuss with your adviser why he or she is moving.

Press the advisor what she says as the advantages to you the client. Perhaps the advisor was being pressured to sell, yes I use the word sell, certain products in the firm that were not exactly advantageous to the clients. An example would be the vast majority of tax shelters that were sold to clients over the last 30 years. You would have been far better off being in the bathroom when the advisor made the call on that one.

Years ago I use to tell my fellow advisors, if the deal was that good, it would not have gotten out of the partnership. The whole deal would have been swallowed by the partnership. A new firm could mean more independence for the adviser, and that independence could benefit you the client.

Perhaps the adviser will be employing as assets under management model which means there may not be a conflict between the adviser’s advice and your interests. If there is in fact a fee only model being used, your interests and the advisor can prove to be the same.  There are still issues however. Take insurance for example. Some companies pay the advisor much bigger fees than others. You need to be aware of that. It’s part of the decision making process.

So figure out where the pressure points are, and you will know which way to go, stay where you are and try to build trust with a new advisor, or go with what has worked with you in the past, and move on to a new firm with the older, trusted advisor. The choice in the end will determine which way your portfolio goes, up or down.