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What happens after I fire my financial advisor?

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  • What happens after I fire my financial advisor?

    So I have had my current financial advisor for about 10 years since my last year of fellowship. I discovered the WCI website/podcast/forum and I am now much better informed then I used to be. My financial advisor seems to have given me great advice along the way and the advice seems to be mostly inline with the WCI philosophy. At this point I have learned a lot from my advisor and WCI and the only thing the advisor is actively doing for me is managing my investments and retirement accounts and answering the occasional simple question I have when I am too lazy to look it up my self. They are charging me a asset under management fee. As my assets grow, the fee they are charging is increasing as well. I am now ready to take on my own management of these assets and will likely fire my financial advisor early next year as long as I don't have any further questions from them by the end of this year. I understand that if I do have any future advising needs I can turn towards a fee only financial advisor when needed. I will talk to my advisor about the transition and I think they should be willing to make the transition smooth for me but I have not brought it up to them just yet and I have a couple pre-emptive questions.

    The assets my advisor is managing includes
    My wife and my Roth IRA (with TD ameritrade "institutional")
    My wife's 401k (fidelity)
    My solo 401k (with TD ameritrade "institutional")
    A small UTAH 529 plan

    Assets I am currently managing myself
    My 401k (fidelity)
    My after tax brokerage account
    A different 529 plan for each of our kids

    My questions are below
    1. Anything I should know about or do before I talk to my advisor about my plan to separate from them?
    2. As you can see above I have a few accounts being managed by our advisor under this TD Ameritrade "institutional" account. With my institutional login I am not able to take control of my account and adjust allocations or funds because it is managed by my advisor. With my login I can only view the holdings. When I fire my financial advisor what happens to these accounts that are in TD ameritrade? If I wanted to keep things simple and not move lots of money around can I keep these accounts with TD ameritrade but switch from a "institutional" account to a regular account and take it over with full control?
    3. If I will be taking over control of the assets would it be easiest for me to keep the TD ameritrade accounts with TD ameritrade or is there a better company I should use and try to switch everything to?
    4. My wife and I both have our company 401k's with fidelity. Would it make sense to try to consolidate as much as we can with fidelity? or does switching companies get too complicated and should I just stick with having some investments with TD ameritrade and some with fidelity?
    5. I understand my wife's 401k must stay with fidelity since its under her employer's plan. I assume I just reset her password and take over control of this account as it is. (similar thing with the UTAH 529 plan?)

    Thank you in advance

  • #2
    Your FA only manages tax-deferred accounts so it's easy to make any investment changes without worrying about taxes. Ask him you would like to assume direct management of the 401k/Roth/529 accounts. You can move your solo 401k and Roths to Fidelity if you want but TDA is fine.

    If you value your FA's advice over the years maybe you could come to a flat fee arrangement. Let him know the AUM model is not working out for you. If he refuses at least you gave him a shot at keeping your business.


    • #3
      You can keep your investments in one brokerage or separate. Just matters how many accounts/passwords you want to remember to check/manage.

      One benefit of having a lot in one brokerage is you potentially get extra benefits, bonuses, or individualized help once you break arbitrary thresholds of assets.

      One risk is going above the FDIC/SIPC insurance caps. But if you're at one of the larger brokerages this risk is minimal.


      • #4
        Q: What happens after I fire my financial advisor?

        A: You get to keep more of your hard earned money.


        • #5
          I fired one few years ago. You will feel better


          • #6
            I fired my financial advisor -- who had me in a reasonable, though unnecessarily complex portfolio, when I realized they did not have my best interests at heart:
            1) 1% AUM. One year when we were really busy we didn't even have an annual meeting (!)
            2) advised us to roll each of our TSP accounts into IRA's so those assets would general an AUM fee for me. (If anyone wants to do that in the future, you can always leave $1K and the door is open to move money back).
            3) Said "yeah sure, we know about the back door roth" only after I asked about the backdoor roth. When I already had had a nondeductible traditional IRA with them for a couple of years.

            Despite being existing AUM customers, also they wanted to charge something like 1.5-3K to develop a new financial plan (??? was my response, weren't you operating under one) prior to transitioning to a flat fee structure. Their future flat fee became $0.


            • #7
              if they have been giving you good advice for 10 years i would aim for a very classy separation.

              this strikes me as a good situation for frank honest phone call followed by a $150 bottle of wine and a hand written note.


              • #8
                OP, did you pull the trigger? If so, how did it go? If not, what is holding you back?

                While it would not be necessary to shift the assets at TD Ameritrade to another institution, I would myself. Two reasons. First, I find it easier to have all my assets at one user interface. In your case probably Fidelity - though try to use their low cost index funds. Second, having another institution on your side can make the transition process easier.

                Regarding the path of just changing the password, that might work in isolated cases, but presumably you signed over control. Better to have your advisor change it back.

                Breaking up these sorts of personal business relationships can be difficult. But it is financially to your advantage to do so. You already paid for the good service to date. If you are ready to move on, all you owe is courtesy.


                • #9
                  Originally posted by Larry Ragman View Post
                  OP, did you pull the trigger?

                  Breaking up these sorts of personal business relationships can be difficult. But it is financially to your advantage to do so. You already paid for the good service to date. If you are ready to move on, all you owe is courtesy.
                  Your “institutional account” at TDA is set up for Advisor control. Your account would need to be changed to a retail customer account, not just the password.
                  Because you and your wife have 401k’s at Fidelity, it makes sense to move to FIDO. You contact FIDO to initiate the process. All under one house.

                  Regarding the courtesy, you owe no apology for moving. The advisor has been paid already. You have simply decided not to renew your subscription.
                  If it is personal, the easy response is feel free to give me advice, I am just not going to pay you AUM, but I will pay. How much? The AUM subscription is over. I would politely say that to a relative.


                  • #10
                    Thanks for all the info everyone. I decided to make the split from my current financial advisor after this next tax season. There has been some recent changes to my tax planning and my wife and I just want to make sure this tax season goes smoothly first. I will ask if our advisors are willing to switch from a assets under management model to a fee for service model. Either way, we will be splitting from them early next year.