Divorce: Breaking up with your Financial Advisor

In June, I separated from my husband. We had been having issues for quite some time, and the accumulated strain of these “irreconcilable differences”, combined with the surreal insanity of living in lockdown with two small boys during a global pandemic, was too much to overcome. So we parted ways, sincerely wishing each other well, and we are all happier for having done it. Because, sometimes, you find yourself in a relationship with the wrong person.

I prefer to think of divorce not as correcting a mistake that you made, but rather as an opportunity to take your life in a new direction. Divorce means acknowledging that a relationship that may have worked well in the past no longer does, and moving on from that does not mean that you have failed. The same can be said of leaving your financial advisor. When you began investing with your advisor, the relationship may have been mutually beneficial. However, there is no shame in admitting that this may no longer be the right person for you.

Your finances, like your love life, are intensely personal. You should choose the person who will help you manage your money as carefully as you would choose the person to whom you would give your heart. And, just like a marriage, the advisor-client relationship needs to be a partnership that works. Ideally, your advisor will be there through your major life events, and you should feel like that person supports you and truly cares about your best interest. If that is not the case, then you owe it to yourself to make a change.

Are you thinking about breaking up with your financial advisor? Here are the four most common “divorce” scenarios that I’ve observed over my 15 years in the business.

1) You’ve met someone new

You may come across another financial advisor with whom you really connect. You may have more in common with the new advisor, or perhaps the advisor specializes in an area of particular interest to you (Socially Responsible Investments, anyone?). Sometimes it’s just a question of logistics; if you’re moving to a new city, you may look for someone located physically closer to you, or if you are getting married, you may decide to merge your finances with your spouse’s advisor.

2) You want to be by yourself

Sometimes a client decides that they want to try to manage their own money. Believe it or not, I applaud this. If you feel that you have sufficient knowledge and time, and you welcome the challenge of selecting your own investments, then I support it wholeheartedly. Financial literacy should be encouraged no matter what, and if that comes in the form of DIY investing, I tell the client to give it their best shot. And if it doesn’t work out, and you decide that you would once again like professional advice, then I will still be here.

3) You want to try joint custody

I’ve had clients tell me that they’d like to invest some of their money elsewhere. They still want to work with me for the bulk of their investments and to help them create a financial strategy, but they’d also like to “play” with purchasing a few stocks on the side (or, in one case, Bitcoins). I view this as an extension of Scenario #2. If you believe that you will benefit from diversifying your portfolio in this way, and if you will enjoy the process of “experimenting” with different investments, then I support you.

4) You just don’t like each other anymore

Again, recognizing that your relationship with your advisor is not working does not mean that you have failed. The mistake here would be continuing to stay with someone because you are either too uncomfortable or, frankly, lazy, to make a change. Signs that this is the case: you never hear from your advisor but you are also reluctant to reach out yourself, you can’t remember the person’s name and are not totally sure if they still work at the same financial institution (often the case at bank branches), you go out of your way to avoid speaking with your advisor and try to handle as much as you can on your own. And it’s also possible that your advisor is “just not that into you” anymore; maybe your assets are too small to be important to him, or maybe he feels you are a drain on his resources. If there is no trust or respect between you, then your financial advisor is no longer doing you any good. Without regular investment reviews or updates, the performance of your portfolio may suffer. And remember, this person most likely continues to get paid as long as you leave your investments with them. In other words, you are paying someone to do nothing.

Whatever scenario you find yourself in, I encourage you to be brave. Find a new advisor, try it on your

own, or explore a promising new relationship. Divorcing your advisor, just like divorcing your spouse, may cost money (some financial institutions charge transfer-out fees). It may be emotionally taxing (who likes to have the “I’m leaving you” conversation?). You might feel unsure or afraid of making a change, but indecision will only harm you.

You owe it to yourself to find happiness with your financial advisor. Don’t stay in a relationship that is no longer benefitting you. You deserve better.