What Happens When My Financial Advisor Changes Firm?

(Originally posted 8/8/2017) The same as in any industry, your financial advisor may sometimes ‘move on’, and it could be for a variety of reasons: a stimulus from inside the firm; an opportunity for professional development; retirement or semi-retirement; or perhaps just time for a change. 

In the international arena, financial advisers might change firm but stay in town, or change location with the same firm, or change both firm and location.

Why Has My Advisor Suddenly Disappeared?

Good financial advisors build long term working relationships with their clients. It’s natural to be concerned or worried when a sudden change or break in communication happens. Lack of information creates uncertainty, which nobody likes. However, there can be several underlying factors behind a temporary lack of clarity:

  • The departing advisor might be under a confidentiality agreement, to not disclose details of any job offer made to him or her.
  • The advisory firm that is losing the advisor might be disorganised or ineffective in its communication, and possibly deliberately so.
  • The advisor may be under a period of contractual 'garden leave' or other restriction while awaiting visa or work permit processing. 
  • In some regulated territories such as Singapore, the advisor will have a ‘blackout’ period while waiting for his or her licence to be re-issued with the new firm. During the blackout, it is an offence for the individual to give any financial advice or anything that might be construed such. Hence, for its own legal protection the new firm will enforce extremely rigorous guidelines on non-communication with clients, until the new licence is approved.

Do I Have The Right To Continue Working With My Advisor?

This is a key point that is sometimes not fully explained. In most markets, a financial advisor is an intermediary – he or she provides you with advice and guidance, helps you with investment selection, handles paperwork and administration – but he never touches your money. This is because your savings and investment relationships are directly with the providers - the bank, insurance company, or investment platform that you have chosen. 
Therefore, as far as the provider is concerned, you have the right to change advisor at any time you like.

If Your Advisor Has Moved Abroad

This is only half the story of course, the other factor is whether it is possible to choose the advisor you want. If your advisor has moved overseas, then it likely will depend on the policy of the advisory firm itself. A large multinational firm might have internal compliance rules that each client must be serviced by an advisor based in, and licenced in, the location of the client. Some smaller firms may be more flexible, allowing you to continue working with your longstanding trusted advisor.

If Your Advisor Is Still In Town

If your advisor has moved to another firm in the same country, then the situation can become a little more murky. Advisory firms can have contractual terms prohibiting solicitation of clients, on the philosophy that the clients ‘belong’ to the firm, not the individual advisor. There might be financial penalties on the advisor for doing so, without the express agreement from the firm.

But, as mentioned above, ultimately the choice belongs to you.

Don’t Feel Pressured – You Are In Control

Suppose your advisor has moved, and the firm has now assigned you someone different. You are now what’s known as an ‘orphan’ client. Do not feel pressured in either direction. Orphan clients can be assigned to more junior, less experienced advisors within the firm, or even a generic service-centre. 

Or you might strike it lucky, and be assigned a senior experienced advisor. It makes sense to meet your new advisor, give him or her a chance to make introductions, and decide for yourself if you want to start a working relationship with this person. 
There is no pressure on you to make a quick decision – you are in control and you can choose to move on at any time, taking your business elsewhere.

Including, of course, to go with ‘your guy’ who recently moved on himself.