Switching Financial Advisors: What to Know

Most people hire a financial advisor with the hope of building a lasting, helpful relationship. But if that connection starts to feel unclear or no longer aligned with your goals, it may be time to reevaluate.

In this article, we’ll walk you through the process of switching financial advisor firms, including when and how to accomplish it smoothly. You’ll learn how to vet and compare new professionals and the most common mistakes to avoid as you identify the best fit for your needs.

When It’s Time to Switch

When you start working with a financial advisor, chances are you’re optimistic about the support you’ll receive. Over time, however, you may not feel like you’re getting what you want out of the arrangement. For this reason, it’s good to know when to cut your losses and leave for better service or performance.

How can you be sure it’s time to switch? Here are a few telling signs:

Poor Communication

One reason is simply a consistent “lack of communication,” according to Chad Gammon, CFP^®, owner of Custom Fit Financial. “This could be from not hearing from them in an extended period of time or the lack of them responding to correspondence,” he says.

If an advisor isn’t quick to communicate or be transparent, you might feel in the dark about what’s truly going on with your money. Even if a professional isn’t directly managing your assets in a discretionary arrangement, poor communication can leave you with little value if you rely on advice to make informed financial decisions.

Not Working in Your Best Interest

Another prominent issue is when an advisor simply isn’t working in your best interest. Donna S. Cates, CDFA^®, CRPC^®, founder of Money Matters Wealth Solutions, notes that a major red flag is “when your fiduciary only reaches out to you when he wants to sell you something.” Rather, a professional needs to help you feel heard and informed.

“A true fiduciary should proactively guide, educate, and advocate for your finances all year round. If the advisor makes you feel intimidated, speaks jargon, refuses to answer your questions, or does not provide a clear financial plan, you deserve better,” says Cates.

Underwhelming Performance

Finally, it may be time to switch if your advisor’s recommendations or investing strategy simply aren’t performing well over a long period. As a client, no matter your life stage, you want results for the fees you’re paying. While performance shouldn’t be judged on short-term results alone, an advisor who overpromises or fails to explain their strategy can leave you questioning the value of their advice.

How to Vet and Compare New Advisors

Before you make a switch, it’s important to know that the financial advisor you’re choosing is an upgrade. This is a relationship that will likely span years, so it’s worth the effort to vet and compare multiple candidates carefully. Crucial areas to consider include whether the advisor is a fiduciary, how they’re compensated, and the breadth of services they offer.

The first important factor, as mentioned, to consider when hiring a financial advisor is whether they’re a fiduciary. This is a professional who is bound by law to act in your best interests when providing financial advice or recommending a product or investment.

To determine if an advisor follows a fiduciary standard, start by asking them directly during an initial meeting. You can also verify their status by checking if their firm is registered with the U.S. Securities and Exchange Commission (SEC) or your state’s regulatory authority via the Investment Adviser Public Disclosure (IAPD) database. Additionally, organizations like the National Association of Personal Financial Advisors (NAPFA) and the CFP Board offer directories that list advisors who adhere to fiduciary principles and hold recognized credentials.

Another important detail is how an advisor charges their clients. Fiduciaries will often charge on a fee-only or fee-based basis, including the following structures:

• Percentage of assets under management (AUM)
• Hourly flat-fee
• Retainer
• Per project

Of course, an advisor’s background and fee structures are only part of the picture. Dominick Leuzzi, investment advisor and financial planner at Walsh & Nicholson Financial Group, notes that perhaps most importantly, you should “find someone who listens more than they talk. Credentials are also a way to gauge an advisor’s dedication to their continuing education.”

It’s also essential to compare multiple advisors rather than choosing the first one who seems qualified. This is a long-term relationship that requires trust and strong communication. We recommend scheduling introductory calls with at least two or three advisors to explore compatibility and build rapport before making your decision.

If you need help getting started, consider using a free matching tool. After answering a brief quiz about your goals, preferences, and current financial situation, you’ll be connected with a professional who fits your profile and needs.

Switching Process

Once you’ve found a financial advisor to work with, the next step is to transfer your assets and any relevant paperwork smoothly and professionally. While this may seem like a challenge, clear communication and an attention to detail can help you make it an easier process.

Below is a step-by-step breakdown of what to expect:

1. Review Your Current Advisory Agreement

Before you take any action, you’ll need to review your current advisory agreement for any clauses or requirements relating to the transfer process. Be especially attentive to any of the following:

• Termination notice rules
• Account or service fees
• Billing cutoffs
• Custodian-specific transfer fees

The above may dictate when and how you’re able to separate from your current advisor. For example, you may have to give 30 days’ notice that you’re switching. You may also need to pay fees to transfer accounts, which your agreement should outline.

2. Gather Important Documents

Before the transfer begins, collect all pertinent financial documents that may be needed by your new advisor or for your records. This includes:

• Recent account statements
• Transaction histories
• Financial plans or projections
• Signed agreements or legal disclosures.

This documentation ensures continuity and helps your new advisor accurately assess your situation. Federal law requires your former firm to transfer account information to the new one, but having your own copies gives you peace of mind and ensures nothing is lost in the shuffle.

3. Initiate the Transfer

Once your paperwork is in order, your new advisor will typically coordinate the transfer through an Automated Customer Account Transfer (ACAT) system, especially if both firms work with mainstream custodians like Schwab, Fidelity, or TD Ameritrade. This usually includes:

• Completing transfer paperwork
• Choosing between in-kind (non-liquidated) or cash transfer
• Understanding which assets can’t be moved (e.g., proprietary or illiquid investments)

Your new advisor should guide you through this process and alert you to any tax implications or fees along the way.

4. Tell Your Advisor You’re Transferring

As a professional courtesy, it’s a good idea to notify your current advisor that you’re leaving their firm. While this step isn’t mandatory, it reflects well on you and keeps the relationship respectful.

A brief phone call or email is usually sufficient. You don’t need to explain your reasons in detail or air any major grievances. Instead, keeping your message polite and to the point fosters respect between both parties and keeps the bridge intact.

Common Mistakes When Changing Firms

While switching firms, it can be easy to make mistakes that could cost you now or in the future. This could be something simple, like ignoring fees or termination notice requirements, or it could mean picking the wrong advisor to sign up with next. Taking shortcuts or making emotional decisions could put you in a worse spot than you’re leaving with your current professional.

Carson McLean, CFP^®, founder of Altruist Wealth Management, says “the single biggest issue when people with taxable investment accounts switch advisors is the mishandling of unrealized gains.” When a new advisor isn’t aware of unrealized gains, they might “trigger a significant and unnecessary tax bill by making changes without understanding the embedded gains and losses,” McLean cautions. “Always get a detailed tax lot report before transferring taxable assets. That way, any future portfolio adjustments can be made in a tax-aware, thoughtful way,” he says.

Another critical mistake is leaving your current advisor based on emotion rather than logic. It’s common for the issue to be simply one of miscommunication or a lack of answers. However, Gammon notes that “if your instincts are telling you it’s time to move on, it’s likely a good moment to start exploring other advisors who may be a better fit.”

Final Takeaway: Should You Switch?

The foundation of any good advisor-client relationship is trust and alignment of goals. If you find yourself questioning the value you’re getting from your financial advisor, it may be time to reassess your relationship. Exploring other options, while requiring some effort, is worth the long-term benefits of working with a high-quality professional.

Switching advisors doesn’t have to be disruptive or overly complicated. With careful planning and research, you can make a smooth transition to an expert who better supports your financial goals.

As Leuzzi puts it, “Advisors work for the client—not the other way around. If you wouldn’t hesitate to change doctors, lawyers, or contractors who aren’t meeting expectations, you shouldn’t hesitate to explore a new advisor relationship when your financial future is at stake.”