Deciding to fire your financial advisor is no easy thing. Sure, the financial crisis of 2008-2009 was used as a catalyst by many to change advisors. But even in good times, problem advisors surface. Last year, the Financial Industry Regulatory Authority received more than 2,300 complaints from investors and suspended 670 individuals. Consumers would do well to consider whether they are getting good service before the inevitable market meltdown.
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Setting aside for a moment that your advisor is not the next Bernie Madoff. You did check him out at http://brokercheck.finra.org/ before hiring him, right? There are some behaviors that will not serve you well that you should be aware of. Questions to consider are these: Is your advisor capable of explaining the investments he’s promoting in a clear way, and helping you understand their risks? Is he accessible and does he listen to you? Has he provided you a written road map that describes your goals and how he intends to get you there?
If you answer no to any or all of these questions, it may be time to consider making a change. Before you do, decide where your money will go next. Are you hiring another advisor? Minding your money yourself? Either way, your money will need a new home. Ed Butowsky says the process is straightforward. “It’s very easy to fire your advisor,” says the Chapwood Investments managing partner. “Simply write an email, and say as of this date please stop any buying or selling in my account. I am transferring my assets to another firm.” Butowsky advises copying the firm’s compliance officer and office manager to make sure everyone knows you are leaving.
Even if you are frustrated, be nice. Even if you are ending the advisor’s relationship managing your money, you will still have to rely on the firm’s office to provide tax information.