Most of us don’t like change. Especially when this change means we are pulled in different directions. This is all too often what happens when an advisor leaves. We (the Advisors) spend years developing a trust-relationship, only to vanish in a puff of details with no warning. Weird, huh? I mean, who does that? Having recently changed broker-dealers myself, I thought I’d address some things that came up during my transition that might help you understand the industry and what to do if your advisor bolts from their current company.
My brother and I were recently discussing Stoicism and one of the truths is that everything constantly flows and changes. The redneck that says, “the only thing that stays the same is that everything changes,” is actually using stoicism. This principle is especially true of finances. Inflation, technology, international trade, supply and demand, politics, and a myriad of other factors affect finance. And the ripple effect can result in your advisor changing firms. So, let’s unpack some facts that will help bring understanding and hopefully peace of mind.
Why didn’t they prepare me?
Your advisor probably couldn’t tell you before-hand. Due to regulations that prevent advisors from selling at competitive firms, they can’t tell you where they’re going. Also, most advisors are bound by penalties if they are caught trying to move. They risk termination and fines, and possibly even suspension. So advisors typically won’t give notice to their firm.
Why’d they leave?
Well, that can be many reasons. Unfortunately, this is one thing you have to figure out. No one is going to admit they left for a big check. But that’s usually part of the deal. You see, firms will entice advisors offering to cover their expenses with financial incentives to come over (and bring their clients with them). Proportionally, the bigger the check, the more strings are attached. Some financial assistance is normal, as there are risks and costs in moving a practice, and a lot of work, too. But suffice it to say, someone has to pay for it. An advisor who is looking out for their clients long term will reduce the incentive to just what’s necessary.
What do I do now?
Interview both sides. Most likely your phone will be lighting up with calls and texts from both old and new firms. This can be stressful. But remember, you don’t have to act now. Take your time. Go sit down face to face and talk to each firm. Ask questions, even if they are tough. And listen intently to their answers. Body language, facial expressions, and eye contact will tell you more than a smooth story. If they can’t convince you they left with your interest in mind, go interview a new advisor of your choosing. Remember: the most important person in this relationship is YOU.
What resources are there for me?
Finra.org has some excellent information. You can use their brokercheck tool to look into any licensed advisor you’re interviewing. Asking friends can be very helpful too. But don’t let their recommendations convince you who to use. They may not have your standards or needs. You still need to interview your candidates. Dave Ramsey has some excellent resources on his site HERE, and can even help steer you toward pre-screened advisors that pass his scrutiny. (Full disclosure: I pay to be in his program.)
There have been many reasons for advisors to jump-ship in the last few years, many of which were catalyzed by Covid19 and the many changes it brought. An unprecedented number of advisors moved during this time. Their general moves can be tracked on Advisor Hub.
Some move for honorable reasons, some not so much. No matter their reason, an advisor should demonstrate full transparency above all else, since this relationship is based upon trust. If you aren’t convinced that your advisor is trustworthy, or even if you’ve been uncertain about their commitment, take this as a gift-an opportunity to untether yourself.
They say a bone won’t break twice in the same place. If you decide to follow your advisor to their new firm, the bond should last and be stronger than ever. Either way, you will win.
And if you or someone you know is searching for a transparent, trusted advisor, reach out to us. We’ll be happy to help.
Always with candor,
Ivan