Maybe your current advisor has a different investment strategy than you’re comfortable with. Maybe your CPA overlooked a document or two, triggering unexpected tax consequences. Or maybe you’re ready for a new team that does more than just help you manage your investment accounts.

Whatever your reason for switching financial advisors or CPAs, the process may be less complicated than you think. Especially if your new advisor proactively communicates with your old advisor to help you expedite the transition process.

Here at Cook Wealth, many of our clients have come to us from other wealth management or investment firms, looking for holistic financial advising that’s values-aligned, family-focused, and goes beyond wealth accumulation. If you’re considering changing financial advisors, the guidance we share may help you too.

When switching financial advisors, professional courtesy goes a long way

The best way to “break up” with your old financial advisor varies a bit based on your situation, the length of your relationship, and how closely you worked together. 

If your partnership with your old financial advisor is more transactional than relationship-based, or if poor communication makes it hard to reach them, you may be tempted to leave your old firm without so much as a call or message. But we always recommend giving your old advisor the professional courtesy of a formal communication to let them know why you’re leaving, and to keep an eye out for a transfer request. Not only is it the right way to go about ending your partnership, it makes it easier to gather the account statements and reports we need to start your new advisor relationship.

Thinking about finding a new financial advisor? Ask these 5 questions before you choose your pro. 

When changing financial advisors, watch for these fees and tax consequences

Most financial advisors and CPAs don’t have a contractual agreement in place requiring you to work with them for a specified timeframe. So, in many situations, you’re free to work with your current financial advisor or tax pro as long as the relationship benefits you.

However, if you have an annuity in place—a contract between you and a life insurance company where you receive future payments in return for a pre-paid premium—there may be a significant termination fee worth considering.

Annuity contracts somewhat limit your ability to make a material change to the assets you have tied up in the annuity. If you want to get that money back out, or cancel your annuity, there can be surrender charges, transaction fees, or termination fees in place, plus serious tax implications that limit what you can do with that money.

If you choose to work with a financial advisor from Cook Wealth, we’re really mindful of these complex considerations. Every financial decision adds up, and we’re careful not to onboard a new client, then stick them with a big tax bill or surrender charges that aren’t in their best interest. Unless there are other circumstances at play, we usually advise our new clients to wait until their annuity is out of the surrender period before we make major changes. In the meantime, we’ll work with you to track and plan around those assets, so you’re in the best possible position through every stage of your investment.

Before you leave your old advisor, ask for these documents

To make your transition from your current advisor to a new professional as smooth as possible, you’ll want to request copies of your:

  • Most recent financial statements
  • Two years of tax returns
  • Receipts showing any estimated taxes paid so far this year
  • Documents showing any recent investment transaction history

One of the most helpful reports we look for when onboarding a new client is a record of any realized capital gains taxes, both earnings and losses, for this current year. That gives us a good idea of the tax bill you’ll have coming, and what we can do to optimize it before year-end.

Whether you choose to work with our tax professionals, or continue working with your own CPA, we’ll usually also ask for your past two years of tax returns. These documents help us get a good understanding of your new investments, taxable accounts, cost basis, and personal finances, so we can start building a personalized plan right from the start.

Have questions about finding a new financial advisor? Reach out to our team

So many individuals feel like they’re stuck working with a financial advisor who won’t call them back, or who can’t see beyond investments. We understand there’s so much more to financial planning than stocks and bonds—and we value the relationship in every partnership.

There are so many complex aspects to financial planning, like maximizing your workplace benefits, getting your estate documents in order, establishing and maintaining a trust, planning for an education fund, and more. We look at the whole picture, and build plans around the financial goals, priorities, and values that matter most to you.

If you’re interested in learning more about our relational approach to financial planning and advising, learn more about our services or book an intro call with our team.