Should you follow your financial adviser?

But other customers are more firmly tied to their advisers. "If you have a close personal relationship with your adviser, there are startup costs in dealing with a new person at the same firm," says Richard Rampell, chief executive of Rampell & Rampell accounting firm in Palm Beach, Fla. By that, he doesn't mean money.

"Say your adviser knows all about your family and different trusts to protect your children. To re-educate someone new might not be simple," Rampell says.

If your adviser is going solo, make sure he or she has backup in case of illness or another personal emergency.

Fees at the new firm

Financial advisers either charge a commission on trades they make for you, a flat fee based on the amount of your assets, or an hourly or service charge. So it's possible your adviser will go from commission-based to fee-based or vice versa.

Experts generally prefer fee-based advisers because they don't have a financial incentive to make unnecessary trades for you. Normally, you shouldn't have to pay more than 1 percent of your assets in fees, and often less than that if your portfolio is worth more than $1 million. But 1 percent can be a significant amount of money. If your portfolio is worth $500,000, the fee amounts to $5,000 per year -- and more, as your portfolio grows.

An adviser's deal with his or her new firm can affect what you pay. "Sometimes new firms will pay a broker a bonus that could influence trading in customer accounts," says John Gannon, senior vice president of investor education at the Financial Industry Regulatory Authority in Washington, D.C. That's because advisers may be expected to generate revenue to justify the bonus.

Expect a fee of about $100 to have your assets transferred to a new firm. Experts agree that your adviser should cover that fee, as it's not you who decided to change firms.

Cost of transferring assets

Some investment products are proprietary to the firm issuing them and can't be moved. So you must either leave them there or liquidate them. "We had a client with structured notes at a bank that would have been costly to exit," Sachs says. "We didn't like the notes." But to save the expense, "we just had the client hang on to (them)."

You should go security by security to get confirmation from your adviser that each one can be transferred, Gannon says. "Even a simple mutual fund may be nontransferable."

And make sure all the information related to your cost and date of purchase is transferred. "We had a client whose old firm claimed they no longer had the cost basis data," Rampell says. "We had to go through a portfolio of hundreds of securities, and it cost him thousands of dollars."

News alert Create a news alert for "investing"


Show Bankrate's community sharing policy
          Connect with us

CDs and Investment

Can heirs cash an old trust?

Dear Dr. Don, The youngest of 6 children, I am 48 years old. My father joined the Navy at 22. In Italy, he met his bride and my mother, and returned to the U.S. to raise our family. In 1959, he bought a trust certificate... Read more



Jill Cornfield

Investors should not fear a Fed rate hike

If the Fed were seen as aggressive with rates, it could lead to a faster market slowdown, too.  ... Read more

Connect with us