How do I switch financial advisors?
Switching financial advisors is much simpler than most people fear. The new firm does almost all the work. You hire the new fee-only fiduciary first, sign their paperwork, and the new firm sends an ACATS transfer request to your old custodian. ACATS is the industry's automated account transfer system. Your assets stay in your name the whole time. They move from one custodian to the other in five to ten business days, usually "in kind," which means each holding moves over without being sold. That matters in a taxable account, where selling would create a tax bill. Once the transfer settles at the new custodian, you send a short, written termination notice to the old advisor. Most fee-only fiduciary advisors have no exit fees, no surrender charges, and no awkward retention pitch. The whole process takes about two weeks of light paperwork and one short email.
The four steps
- Pick the new firm. Ideally a fee-only fiduciary RIA. Verify on adviserinfo.sec.gov.
- Sign new firm's account paperwork. They will ask for ID, beneficiary info, and a copy of your current statement.
- Authorize the ACATS transfer. The new firm initiates it. The old custodian releases the assets.
- Send the termination notice to the old advisor. A two-line email is enough.
What can go wrong, and how to handle it
- Proprietary funds at the old firm. Some firms hold "house" mutual funds that other custodians cannot accept. Those positions may need to be sold before the move. Talk to the new advisor first about the tax impact.
- Annuities and surrender charges. Variable annuities can have surrender penalties for several years. Read the contract before deciding to move.
- Old firm "retention" calls. Be ready for one. Politely repeat that the move is final.
- Fee credit at the old firm. Many fee-only firms refund unused fees on a quarterly bill. Ask.
What to do in the first 90 days at the new firm
Make sure the new firm produces a written financial plan in year one. Confirm the all-in cost on a $500K account in writing. Read the firm's Form ADV Part 2A on your own at least once. Set a reminder to review the plan annually for at least the first three years.
What you should never have to do
You should never have to ask the old advisor's permission to leave. You should never have to sell positions just to move them, except for proprietary house funds. You should never have to pay an "exit fee" at a fee-only fiduciary RIA. If any of those come up, ask the new advisor for help — they have seen the playbook and will tell you what is reasonable.