The relationship with your financial advisor shapes your entire financial future. From mapping out retirement to planning for major life changes, the right advisor can set you up for success or hold you back from reaching your potential.
Yet many people stick with advisors who aren’t serving them well, missing out on growth opportunities and potentially losing thousands in the process. It might feel awkward to break up with your advisor, but the cost of staying in a bad relationship is almost always higher.
If you’ve been wondering whether it’s time to re-evaluate your advisor relationship, this guide will help you spot the warning signs, understand what to look for in a new advisor, and make the switch without unnecessary stress.
Key Takeaways
- You should re-evaluate your advisor relationship if communication is poor, performance lags, or you feel your needs aren’t being met
- The difference between fee-only and fee-based advisors matters—one model typically has fewer conflicts of interest
- Changing advisors doesn’t have to be messy—with the right approach, you can make a smooth transition
- Your financial security deserves a truly great advisory relationship, not just an adequate one
8 Red Flags That Signal It’s Time for a New Financial Advisor
1. Communication Problems
Good financial advisors make themselves available and explain money matters in plain English. It’s time to reconsider your relationship when:
- Your calls or emails go unanswered for days
- Your advisor avoids tough conversations about market drops or disappointing returns
- They talk over your head with financial lingo without making sure you understand
- You only hear from them when they want to sell you something new
As one advisor puts it, “If you call your advisor, they should get back to you within one business day. Regular market updates and quarterly check-ins are the norm for attentive advisors.“
2. Poor Investment Performance
No advisor can beat the market every time, but consistent underperformance is a legitimate reason to look elsewhere. Be concerned if:
- Your portfolio trails behind appropriate benchmarks year after year
- Your advisor blames poor performance on everything except their strategy
- The level of risk in your portfolio doesn’t match your comfort level or life stage
Remember, a single bad year doesn’t necessarily mean you need a new advisor—markets have down periods. The real question is whether your investments align with your specific goals and timeline.
3. Not a True Fiduciary
A fiduciary advisor must legally put your interests first—but not all advisors follow this standard. Consider switching if your advisor:
- Won’t put in writing that they act as a fiduciary 100% of the time
- Pushes products that seem more profitable for them than suitable for you
- Earns commissions that might influence their recommendations
- Gets defensive when asked how they make money
Research shows that non-fiduciary advisors often recommend options that generate higher fees for themselves, potentially costing you thousands over time.
4. One-Size-Fits-All Approach
Your financial plan should be as unique as your life. Red flags include:
- Your financial strategy hasn’t changed despite major life events (marriage, children, new career)
- You suspect your advisor gives the same cookie-cutter advice to everyone
- The investment mix doesn’t reflect your real-life timeline or goals
- They seem more interested in selling products than solving your specific problems
5. Hidden or Excessive Fees
Every dollar you pay in fees is a dollar that isn’t growing toward your goals. Watch out if:
- You can’t get a straight answer about all the fees you’re paying
- Your total advisory costs (including fund expenses) exceed 1.5% annually
- You discover charges that weren’t clearly disclosed upfront
- Your advisor gets uncomfortable when discussing how they’re paid
Even a seemingly small difference in fees—say, 0.5%—can reduce your retirement savings by tens of thousands over a lifetime.
6. Limited Expertise
As your finances grow more complex, you may need specialized knowledge your current advisor lacks. Consider a change if:
- Your advisor seems out of their depth with issues like business planning, stock options, or estate strategies
- They can only help with investments, not comprehensive financial planning
- You’re constantly referred elsewhere for tax or estate questions
- They can’t provide the specialized guidance your situation requires
7. Ethical Concerns
Trust matters more than almost anything else in financial relationships. Move on immediately if:
- Your advisor has disciplinary actions on their record (check FINRA BrokerCheck)
- They pressure you to make quick decisions without explaining the pros and cons
- They make promises about returns that sound too good to be true
- Your gut tells you something isn’t right about their recommendations
8. You Just Don’t Feel Valued
Sometimes the clearest sign is simply how you feel after meetings. It might be time for a change if:
- You feel talked down to or dismissed
- Your questions seem to annoy your advisor
- They do most of the talking and little listening
- You leave meetings more confused than when you arrived
Money is personal—you deserve an advisor who treats you with respect and makes you feel heard.
Fee-Only vs. Fee-Based Advisors: Why It Matters
When shopping for a new advisor, how they get paid makes a big difference in the advice you’ll receive.
Fee-Only Advisors
These advisors earn money only from what you pay them directly, through:
- A percentage of assets they manage (typically 0.5% to 1.5% annually)
- Flat fees for specific work
- Hourly rates for their time
Importantly, they don’t earn commissions from financial products they recommend.
The upside: Since they don’t get kickbacks from investment or insurance companies, they have fewer conflicts of interest. Their success is tied directly to your portfolio growth.
The downside: Their services might cost more upfront, and many require minimum investment amounts to work with them.
Fee-Based Advisors
Despite the similar name, fee-based advisors can earn both client fees AND commissions from products they sell. This dual compensation model means:
- They might recommend products that pay them commissions
- They may operate as fiduciaries when planning but not when selling products
- Their total compensation is often less transparent
The upside: They can provide both advice and product implementation under one roof, which some clients find convenient.
The downside: The potential for conflicts of interest is higher, as they may earn more by recommending certain products over others.
For most people, a fee-only fiduciary relationship offers the clearest alignment between your success and your advisor’s incentives.
How to Switch Wealth Managers Smoothly
Breaking up with your financial advisor doesn’t have to be awkward. Follow these practical steps:
1. Find Your New Advisor First
Before ending your current relationship, interview potential replacements. Look for:
- Fiduciary status
- Clear fee structure
- Experience with your specific needs
- A communication approach that works for you
2. Understand the Exit Process
Review your current agreement to understand:
- Any termination fees
- Required notice periods
- Account transfer procedures
3. Have a Professional Conversation
While you don’t have to explain your decision:
- Keep the conversation brief and professional
- Focus on your needs rather than criticism
- Be prepared for attempts to keep your business
- Stay firm in your decision
4. Handle the Paperwork
Your new advisor will typically:
- Prepare transfer documents
- Guide you through account transitions
- Help set up your new financial plan
The Bottom Line
Your financial future is too important to settle for an advisor who isn’t serving you well. If you’ve spotted several of these red flags in your current relationship, it’s probably time to explore your options.
Remember that the right advisory relationship should provide expert guidance, clear communication, and a strategy tailored specifically to your goals. By re-evaluating your advisor relationship when necessary and making changes when appropriate, you’re not just protecting your money—you’re enhancing your chances for long-term financial success.
Kapitalwise connects consumers with qualified financial advisors who meet their specific needs and preferences. Learn more about how we can help you find the right match for your situation.
Common Questions About Switching Advisors
Will changing advisors hurt my investments?
Most investments can transfer as-is without being sold. Your new advisor can help determine which holdings make sense to keep or replace.
When is the best time to switch?
You can change anytime, but transitions often go smoothest when markets are relatively stable and outside of tax filing season.
Do I have to tell my advisor why I’m leaving?
No—a simple notification that you’re moving your accounts is sufficient. If you do share feedback, keep it professional and focused on your needs.
How long will the switch take?
Most account transfers complete within 2-4 weeks, though more complex situations may take longer.
