How to Change Financial Advisors
Even a valuable financial advisor can, over time, damage the relationship to the point where you may decide it’s time to switch and find a new one
Table of Contents
10 Valid Reasons to Switch Financial Advisors and How to Do It
Here are 10 more reasons:
- Weak Performance
- Your Advisor Doesn’t Listen
- Poor Communication
- Advisor Doesn’t Adapt to Your Changing Situation
- Unreasonably High Costs and Fees
- Lack of Transparency
- Only Calls You to Make Trades
- Simple Personality Clash
- Lack of Trust
- They Just Don’t Care
1. Weak Performance
A consistently underperforming portfolio that does not support your lifestyle or retirement goals is one of the most common reasons for changing financial advisors.
To pursue stronger results, it’s important to work with an advisor who follows a proven process for building fully customized portfolio plans — designed to help you achieve your financial goals and adapt as your needs evolve.
2. Your Advisor Doesn’t Listen
You have questions, concerns, and ideas about how you want your money managed — and you deserve clear explanations and thoughtful attention.
If an advisor disregards your input, moves forward without collaboration, or consistently prioritizes their preferences over your needs, it may be time to find an advisor who truly listens and adapts to your financial vision.
3. Poor Communication
If months pass without hearing from your financial advisor, it raises valid concerns about service and value.
You should expect regular communication, based on a schedule and format that fits your preferences — whether by phone, email, mail, online platforms, or in-person meetings. Consistent, responsive communication is essential for a strong financial advisory relationship.
If your advisor seems unavailable, disconnected, or inattentive, it may be time to consider a better fit.
4. Advisor Doesn’t Adapt to Your Changing Situation
Your financial life is dynamic. Career changes, windfalls, medical challenges, family transitions, and economic shifts can all affect your financial plans.
An effective financial advisor will update your strategies regularly — not just during major milestones, but proactively, to ensure continuous optimization. Financial plans should evolve every few years, if not more frequently.
If your advisor has not updated your financial plan in several years, or if they are not adjusting to major changes such as increased income, real estate sales proceeds, or complex asset growth, it could be a signal to seek a new advisor.
For individuals whose liquid assets have grown beyond $500,000 — and especially those approaching or surpassing $30 million — specialized wealth management planning becomes even more critical.
If your current advisor does not have experience managing complex portfolios at these levels, it may be worth evaluating new advisory options.
5. Unreasonably High Costs and Fees
Many financial advisors charge around 1% of assets under management. However, hidden costs, fund expenses, transaction fees, and other charges can quietly erode your investment returns over time.
Understanding your full fee structure — including indirect costs — is important. Depending on your portfolio size, these fees could cost you tens or even hundreds of thousands of dollars annually if left unchecked.
Reviewing and comparing advisory fees is an important step to protecting your long-term wealth growth.
6. Lack of Transparency
If you have not received reports for an extended period, cannot get clear answers to basic questions, or are left without explanations despite repeated requests, it may be a sign of deeper problems.
An advisor who struggles to be transparent about your finances should not be managing your wealth. Transparency is essential for building trust and maintaining a productive advisory relationship. If communication feels evasive, it may be time to consider other options.
7. Only Calls You to Make Trades
If you primarily hear from your financial advisor only when they want approval for a trade, it raises several concerns.
First, it may suggest that the advisor earns commissions on transactions, which could create a conflict of interest. Second, frequent trading often reflects a short-term mindset that may not align with your long-term financial goals.
Moreover, excessive trading can increase your tax burden significantly, potentially exposing you to higher capital gains taxes. A strategic, long-term investment approach typically serves wealth preservation goals better than constantly chasing market trends.
An advisor should prioritize updating you on your overall financial situation, not just contacting you to authorize trades.
8. Simple Personality Clash
If interacting with your financial advisor feels consistently uncomfortable or tense, it might indicate a fundamental mismatch in communication style or values.
Getting along with the professional managing your wealth is important. Trust, openness, and comfort are essential elements of a healthy financial advisory relationship. If personal chemistry is lacking, it may be appropriate to explore alternatives better suited to your needs.
9. Lack of Trust
Trust is the foundation of any successful long-term advisory relationship. If trust is broken — whether due to poor communication, questionable advice, or repeated disappointments — it can be extremely difficult to rebuild.
A loss of trust is often a clear signal that it is time to seek a new financial advisor who aligns more closely with your expectations and priorities.
10. They Just Don’t Care
Many of the issues that lead clients to switch financial advisors can ultimately be summarized by one observation: the advisor does not seem to care.
When calls go unanswered, important questions are ignored, or updates are inconsistent, it sends a message that you are not a priority. Regardless of whether this is intentional or due to inattention, it is the advisor’s responsibility to maintain strong client relationships.
Feeling undervalued should never be part of your financial experience.
Switching Financial Advisors
If you do decide to switch financial advisors, you can do it the hard way or the mostly easy way. We will explain the difference in a moment.
How to Switch Financial Advisors?
Once you decide to make a switch. inform your advisor and keep communication lines open to make switching easier. You will terminate one contract and start another with the new firm. The paperwork should be minimal.
But first, here are the main issues you will need to consider when switching:
1. Check the Fees
Before switching, review any potential costs. Some investment agreements may include termination fees, and you could also incur capital gains taxes if selling assets is necessary during the transfer process.
Additionally, confirm whether your advisor is fee-based and whether their fees are prorated upon termination. It’s essential to account for all related costs, including:
- Termination fees
- Internal investment expenses
- Trading commissions
- Capital gains taxes (short-term or long-term)
Be sure the overall fees and tax implications are reasonable and clearly understood before proceeding.
2. Get Copies of All Important Documents
Collect all statements, tax records, and relevant financial documentation for as many years as possible. Having the cost basis information for any investments is critical, especially if assets must be sold during the transfer.
Comprehensive records will make the transition smoother and help your new advisor build a well-informed financial plan.
3. Find Out if Any Investments Are Proprietary
In some cases, previous advisors offer proprietary investments available only through their firms. If you hold these types of assets, you may need to sell them before switching, which could trigger tax consequences.
However, transferring to a new advisor offers an opportunity to refresh and update your portfolio — often leading to better alignment with your current financial goals. Opening new accounts can also simplify and consolidate previously scattered holdings.
4. Check the Tax Consequences
Capital gains taxes are the most common tax consideration when switching advisors, but early withdrawal penalties or other taxes might also apply depending on the types of assets involved.
If your investments are custodied with third-party institutions like Fidelity or Schwab, it’s possible to change advisors without triggering taxable events. Always review the potential tax implications with your new advisor before making any moves.
5. Inform Your Current Advisor About the Change
Communicating your decision to switch is a professional courtesy that helps maintain goodwill and ensures a smoother transition.
By keeping communication open, you also help facilitate cooperation between firms, making it easier to transfer your accounts and finalize the change efficiently.
How Much Paperwork Is Involved in Switching Advisors?
Generally, the paperwork involved in switching financial advisors is fairly minimal. After everything is finalized, you will likely need to sign only a few essential forms.
Earlier, we mentioned the difference between the “hard way” and the “mostly easy way” to make the switch. Here’s what that means:
The hard way is managing all the steps yourself — gathering documents, consolidating accounts, communicating with both firms, and ensuring a smooth transition. It can be time-consuming and requires attention to many details.
The easier way is to work with a new advisor who can handle the majority of the transition logistics for you. Many firms assist new clients by managing account transfers, consolidating scattered accounts, streamlining automatic payments and deposits, and addressing potential tax implications — helping to simplify the process significantly.
You should expect to sign a few forms, possibly using secure digital options like DocuSign if preferred. However, with the right support, much of the administrative work can be handled efficiently behind the scenes.
How Long Does It Take to Switch Financial Advisors?
The timeframe for switching advisors can vary depending on the complexity of your accounts and the institutions involved. In many cases, the full transition can be completed in as little as one to three weeks.
Working with an organized, proactive advisor can help ensure that your transition is completed as quickly and smoothly as possible.
How Do I Find a Better Financial Advisor than the One I’m Leaving?
That, of course, is the $6 million question — especially if you are a high-net-worth investor.
Finding a better financial advisor requires careful consideration of your needs, goals, and expectations. Understanding what went wrong in your previous advisory relationship is a critical first step toward making a better choice.
A qualified advisor should offer transparent communication, customized financial planning, fee clarity, and a long-term strategy that evolves with your life changes.
The Hidden Costs of Changing Financial Advisors
Switching financial advisors can involve some hidden costs. Being aware of these potential impacts will help you plan the transition more effectively.
1. Tax Implications of Switching Financial Advisors
When assets are sold to transfer them to a new advisor, any gains realized may trigger capital gains taxes. If assets are sold within one year of purchase, gains are taxed at ordinary income rates, which can be higher than long-term capital gains rates.
However, most retirement account transfers (such as IRAs) typically do not incur immediate taxes if handled properly.
2. Transaction Fees
Each asset transaction may involve a fee, depending on the trading platform and the type of asset being moved. In addition, your current advisor may charge a termination fee, which should be outlined in your service agreement.
In some cases, you can negotiate with your new advisor to reimburse or offset these fees.
3. Surrender Charges and Back-End Load Fees
Selling certain investments, such as annuities or specific mutual funds, can involve surrender charges or back-end fees. These costs can sometimes reach 10% or more.
Before transferring accounts, it is important to review each asset’s potential charges and discuss timing strategies with your new advisor to help minimize unnecessary expenses.
Finding the right advisor is critical for protecting and growing your wealth with fewer obstacles. If you are ready to start your search, PillarWM Finder offers independent resources to help you take the next step with confidence.
Use our platform to find experienced financial advisors who align with your long-term financial goals — informed, transparent, and on your terms.
