How to replace your financial adviser

There are usually only two times you’ll need to replace your adviser. Either

• They’re out, for example when your adviser is leaving the industry, moving to another firm or retiring, or

• You’re out, when you’re making the decision your adviser no longer meets your needs

Most of the time getting advice is about working together over time to achieve an end game, such as a certain level of wealth or a lifestyle towards retirement and beyond.

Most of the time we find someone we like working with who can do what’s needed really well. When the match is good, the benefits of maintaining the relationship outweigh the benefits of switching things around year-after-year.

Starting from scratch regularly has rarely been a proven strategy when it comes to wealth. However, these are “interesting” times.

The Great Abandonment

One major impact of recent changes we’ve written about before is that not only are many advisers exiting the industry (forecast up to 50% gone by the end of 2023), but many clients are asking questions about the quality of the advice they’ve been receiving.

Part of this is to do with steadily increasing transparency about what good advice really is and, importantly, how it’s different from knowledge of financial products alone, but it’s not just that.

There are other reasons at play here too, some of them related to what’s happened these past two years, the economic climate, government issues and more. It’s a mixing pot.

The result though is as advisers leave the industry many clients are leaving their existing advisers and seeking a new advice relationship.

Minimising interruption

One of the reasons people seek advice is to make sure things are managed well and nothing gets missed that may later prove at best costly; at worst unrecoverable.

Having a fresh set of eyes is part of this, but when replacing an adviser there’s a game to be played on two fronts. Don’t delay, and don’t rush the decision.

How to replace an adviser

Here’s how to do it well.

• Do your research – The point here is that often the best way to find the right advisers to speak to is by asking for recommendations from friends and family or colleagues. Why? Well, most good advisers tend to build up expertise in certain areas or work with certain types of situations. Given people tend to know people like them, asking for recommendations will often connect you with the right adviser which is better than any blind search.

• Check credentials – The past four years’ focus on education, ethics and more has included the introduction by ASIC of a financial adviser register, which can be used by the public to check that what an adviser says they can do, they are qualified for. Availability of information like this has reduced the amount of rogue financial scammers (not advisers, as many reported as rogue “advisers” rarely hold any qualifications that would allow themselves to be called advisers). So, the odds of running into the next Melissa Caddick can be drastically reduced with a quick check here.

• Choose what’s right for you – There is no one right way to give advice (though there are many wrong ways). At the core, good advice is about what you want from your money, rather than just about the money or financial products alone. We’ve written extensively about how to get the best from an adviser, but the best summary is to go with someone who checks out, has the right approach and feels right for you.

• Don’t Hold Back – Feel free to ask the “pointy” questions that matter like whether they’ve passed their practitioners exam or hold the relevant undergraduate degree. Good quality advisers will be able to answer this in a heartbeat.

• Be comfortable with the fees before saying yes – For reasons we’ll share more about, the cost of advice has risen drastically, due to much of the additional legislative work now required. In fairness though the saying, “If you think professionals are expensive, try hiring an amateur” rings true. Good advisers will be able to show you clearly how the advice you’re paying for will put you in a better position, outlay the fees exactly, what you get for your money and whether an ongoing relationship is part of that. Make sure it’s clear and make sure it’s what you want.

• Get everything before you go – Advisers are required to maintain good records of all advice provided and getting as much of that before you go is not just good practice, it’s your right. After all, when you sit down with the new adviser, if they have a clear picture of your journey so far and the advice provided, it’s going to be much easier and quicker for them to help. Don’t feel concerned about asking to be provided with what you need.

We hope this is useful, whether it’s you seeking to replace your adviser, or a friend who may need some guidance. We’re working with several new clients now who, either because they’ve lost an adviser, or decided to disengage themselves, and are seeking a better advice relationship.

If you’re reading this and feel we can help, please reach out. We’ll talk you through how we work, if we’re the right ones for you and help you get clear on the way from here.

Disclosure Statement: This communication has been approved and issued by Sovereign Wealth Partners Pty Ltd ABN 18 607 071 367 Corporate Authorised Representative (No. 001233909) of Sovereign Capital Pty Ltd ABN 44 164 127 833, AFSL 456235.

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