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Between sharing personal and professional goals, creating a financial plan, and maintaining systematic savings habits throughout the years, building a strong relationship with a financial advisor and their team can take tremendous time and effort. Changing wealth management firms can be a difficult but potentially necessary decision if your needs are not being met, or if the value can be extended even further with a new firm. When deciding to make a switch, the following should be considered to help ensure a smooth transition of assets:
1. Review Your Original Letter of Engagement
When you first became a client of your existing firm, you were likely sent disclosures and documents pertaining to your advisor-client relationship. Be sure to review these in great detail before initiating a switch. Some firms require a certain notice to ensure account transfers are processed smoothly. Other firms may require an official written notice and will not accept email correspondence. Does your current firm charge an annual fee? Find out how the fee is assessed and if you will be reimbursed at all, depending on when you were charged and when you are making the switch. Be aware if there are any termination or transfer fees that will be incurred upon making a switch and have direct knowledge as to who will be responsible for paying such fees if they exist. Hopefully, the new firm taking over will cover all transfer fees regardless of when they are incurred.
2. Communicate with Your Existing Financial Advisor
If you have developed a relationship with your existing advisor, a professional courtesy notifying them of your switch is encouraged. Giving the advisor direct feedback for why you are making a switch can help them improve their existing services and processes, or if it’s because a matter of consolidating from two advisors down to one, sometimes these are very easy conversations.
3. Gather Recent Account Statements
To hold for your personal records, be sure to gather an up-to-date copy of all account statements before facilitating a switch. After keeping a copy for yourself, send all account statements to your new wealth management firm and allow them to facilitate the transfer process, getting most of the work off your plate. If you are transferring a non-qualified brokerage account, don’t just gather a statement that shows the account balance. Be sure to track down a statement showing the account’s cost basis, or original price for which the asset was required. This will be necessary for your new firm to help coordinate correct tax planning with your CPA when the time comes (if the tax basis does not transfer between custodians).
4. Check Regarding Sales Charges, Proprietary Funds, and Surrender Charges
While many ETFs, mutual funds, and investment options can be easily transferred, there are certain investments that may be exclusive to your former advisor’s firm. Be sure to inquire about the necessary steps to transfer those funds, as there may be additional steps to take, or time required to fully liquidate your position. Additionally, certain assets (annuity contracts, for example) may be subject to surrender fees if liquidated before a certain period. Having all this knowledge before initiating your switch will help ensure that you and your new wealth management firm are on the same page.
5. Allow Your New Firm To Actually Facilitate The Switch
More likely than not, your new wealth management firm will be assisting in filling out the required paperwork and ensuring the transfer process goes smoothly. If switching from one investment custodian to another, be prepared to wait a few business days before regaining access to your accounts while they are transferring to the new provider.
Keeping, at least, these steps front of mind will help ensure a smooth transition of assets to another firm.
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Important Disclosures:
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.
EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
To view EWA’s public disclosure, registration, Form ADV and Part 2B’s, click here.
To view EWA’s Client Relationship Summary (CRS), click here.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.