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One of the most important financial decisions we make is who we take financial advice from. This is especially important if you are paying for financial advice. What do you do if you are getting bad advice and how do you fire a financial advisor?
As someone who writes about money, there is nothing more important than going out into the real world and talking to actual people about money. It’s very easy to get trapped in our writer’s bubble in the personal finance community where we enjoy nerding-out over very advanced financial topics.
Over Christmas, I was back home in Nova Scotia and had the chance to catch up with a lot of people I had not seen in quite some time. During one of those conversations, the topic of money came up (as it tends to when someone is speaking with me) and one person said they would love my advice on a financial problem that has been stressing them out.
“How do I fire my financial advisor?”
This person did not want to know if they “should” fire their financial advisor. They were quite clear on the fact that the advisor needed to be fired. What they wanted to know was “how” to do it. They were looking for a step-by-step on how to fire their financial advisor and what to do with their money afterward.
I had to admit that I have no experience with the issue as I have always self-managed my finances. The more I thought about it the more clear it became why this is a stressful issue for people.
The power dynamic in an advisor-advisee relationship is tilted heavily towards the advisor. The advisor is the expert on financial matters, that is why you hired them. This can make it very difficult for some people to challenge their advisors or even ask questions about what the advisor is doing with their money.
This is an important issue and providing a detailed answer would provide tremendous value to my readers. I’ve been researching this question the past several weeks and I am pleased to present this brief guide to firing your financial advisor.
There are four steps you need to take before actually firing your advisor.
When you first hired your financial advisor, you likely had to sign a bunch of paperwork. Read through these documents carefully as there is likely a clause about how to terminate the relationship with the advisor.
If you can’t find the contract ask your advisor or their administrative assistant for a copy of your contract. There are two particularly important sections of that contract.
Before you fire your advisor, it’s a good idea to know what you’re going to do with your money going forward.
You have three options to consider.
Do your homework and choose the path you are most comfortable with moving forward.
The final step before firing your advisor is to request a copy of your investment records. You have a right to these files which have valuable information on your investing history.
It’s finally time to fire your advisor. Refer back to your contract with your advisor as it likely details the exact process that must be followed to terminate the relationship. Odds are you will be required to provide the advisor with a signed letter. You have two options to deliver this letter.
If you have a financial salesperson rather than an advisor, be prepared for them to try and talk you out of leaving. Do not feel compelled to engage in a “retention pitch”.
Make it clear your decision is final and stick to the business at hand, the transfer of your assets and all the necessary paperwork.
Breakups are never easy, situations involving the heart or the wallet can be very stressful and emotionally draining. It’s important to do your homework so that you can make the break as clean and painless as possible.
Have you ever fired a financial advisor? Or are you a financial advisor who has ever been fired? I’d be fascinated to hear your experience in the comments below.
Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.