How to Tell Your Financial Advisor You Are Transferring

Transferring financial advisory services is a common step for clients seeking a different approach to their financial planning. Proper preparation and clear communication ensure a smooth transition of your financial assets and relationships.

Before You Communicate

Before contacting your current advisor, clarify your transfer objectives. Understand the precise scope of what you intend to move, whether it includes specific investment accounts, all assets under management, or simply the advisory services themselves.

Gather necessary information, such as current account numbers for all relevant accounts, including brokerage, retirement, and trust accounts. Have your current advisor’s contact information readily available, along with details for the new advisor or institution and any account transfer forms they may have provided.

Review your existing service agreements with your current financial advisor. These documents often outline notice periods or specific termination clauses. Understand these terms, including any fees associated with account closure or transfer, before proceeding. Some firms may charge transfer-out or account closure fees.

Prepare for potential questions from your current advisor. Advisors might inquire about your reasons for leaving or what they could do to retain your business. Formulating concise and professional responses in advance can help you maintain control of the conversation without feeling pressured to provide extensive justifications.

Crafting Your Message

When informing your current financial advisor of your decision to transfer, carefully consider the communication method. Options include an in-person meeting, a phone call, or written communication like an email or formal letter. A written approach often provides a clear record and can help maintain a professional tone, though a direct conversation can also be appropriate depending on your relationship with the advisor.

The key elements of your conversation should be direct and concise. State your decision clearly, for example, by saying you have decided to move your financial advisory services to another firm. If appropriate, you may express gratitude for their past guidance, but avoid lengthy explanations or justifications for your decision. The conversation’s purpose is to inform, not to negotiate or seek approval.

Handling questions and objections from your advisor requires maintaining a professional and firm stance. Your advisor might ask why you are leaving; however, you are not obligated to disclose detailed reasons. Reiterate that your decision is final and shift the focus to the administrative aspects of the transfer. Engaging in debates or prolonged discussions about your choice is generally unnecessary and can complicate the process.

The conversation should set clear expectations regarding the next steps. Confirm that you will be initiating the transfer of your accounts and that the new firm will handle the procedural aspects. This approach helps ensure that the communication remains focused on the practicalities of the transition, rather than delving into emotional or personal factors. Maintaining this professional boundary facilitates a smoother handover of your financial affairs.

Managing the Transition

After informing your current advisor, the next phase involves initiating the transfer process, which is typically handled by your new financial advisor. They will provide the necessary account opening forms and transfer authorization documents, such as the Automated Customer Account Transfer Service (ACATS) form. You will sign these forms to authorize the movement of assets from your current firm to the new one, often verifying your identity and providing tax identification information, like a W-9.

Coordination between your old and new financial institutions is a significant part of the transfer. The new firm will submit the transfer request to your current firm through systems like ACATS. While the new firm initiates the process, your current firm will then process the request, which may involve liquidating assets that cannot be transferred in kind, such as proprietary funds. This inter-firm communication helps ensure the accurate transfer of assets and crucial cost basis information for tax reporting purposes, as firms are required to report cost basis to the IRS on Form 1099-B for covered securities.

Monitoring the transfer is important to ensure all assets are moved correctly. Most ACATS transfers are completed within six business days, though the entire process can take several days to a few weeks, depending on account complexity and assets involved. Complex transfers, such as those involving alternative investments or illiquid assets, may extend the timeline, potentially taking four to eight weeks. Regularly check with your new advisor for status updates and confirm that all expected assets have arrived.

Finalizing relationships involves confirming account closures with your former institution once all assets have successfully transferred. Ensure you receive all final statements and tax documents, such as Forms 1099-INT, 1099-DIV, and 1099-B, from your old firm for the period your assets were held there. Reviewing the final fee statement from your previous advisor helps confirm that all charges are accurate and expected, ensuring a complete and orderly transition of your financial accounts.