Leaving Advisors: Your Stories

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Leaving Advisors: Your Stories

First, my sincere thanks to those who shared their stories about switching to smarter investing. The response was fantastic….more than 10,000 words worth. Learning about your experiences will encourage many others to Beat the Bank!

I believe the following summary is very instructive but it is not a scientific survey. Also, while every investor can benefit from learning the basics, switching to lower cost investing is not necessarily right for everyone. You ultimately have to decide what is right for yourself.

The overall reader experience of switching to lower cost investing can be summarized as follows:

"It may be a hassle, but it's worth it!"

No respondent regretted making the move. Here are some quotes:

"I believe this move will benefit our family tremendously."
"This is the best decision I have ever made about money."
 "It's fun and very rewarding."
"I should have done this many years ago."
"I moved to a robo-advisor and couldn't be happier."
"I'm happy with the dividend income I am receiving while paying no fees. I would encourage others to make the move."
 "Realizing how much I have paid in fees is a bitter pill to swallow but there is great satisfaction knowing I have put an end to it."
"Knowledge is power. It is well worth the time to take control of my money and my future."
"It was definitely worth switching."
 
Once they started to ask questions, many investors were shocked to learn about their mutual fund costs.

"I knew about costs but seeing the impact was a real shocker."
"I was blissfully ignorant that fees were charged on my total investments regardless of gains or losses."
"We are sick to learn what we have been paying all these years."
"We have asked over and over again where we could see all our fees but have received no answer…..it is appalling."
"Í had no idea I was paying for advice and I still can't get a clear answer on how much I am paying."
 
 
For some investors, making the switch was easy. Many didn't even have to speak with their advisor as their new firm took care of the transfer. Others had to face stressful conversations.

"I emailed my advisor after the fact."
"The financial industry indoctrination was so strong that it was hard to make the leap."
"I got pushback but was firm with them. It was a hassle but my funds were eventually moved to my new robo-advisor."
"My advisor was disappointed but respected my decision."
"It was uncomfortable. I had relationships with the firm for 10 years."
"My advisor started giving me the hard sell. I heard it all: 'it is very hard, risky, no guarantees, etc.' But she ultimately respected my decision."
"My advisor is a relative so it made leaving very awkward."
"I felt very uncomfortable with my advisor. He ignored my questions, didn't seem to understand tax and wasn't interested in discussing asset allocation. My new online discount broker took care of the transfer….I did not have to contact my advisor."
"Our advisor did all the right things but we are now educated and disciplined enough to take charge of our own investments."
 
Actual transfer of funds was smooth for some but others had to spend a lot of time getting their old firm to process the paperwork. Some were charged fees on the way out the door (which were sometimes covered by their new investment firm).

"I sent a professional email to my advisor and his team thanking them for their service and this helped considerably with the transfer."
"If you are leaving an institution that does not process transactions electronically, expect your transfer to take at least 30 days."
"The asset transfer process was very smooth."
"Yes, it was a hassle and there were costs. It took six weeks"
 "I emailed my advisor and the transfer to my new online discount broker went smoothly. My online discount broker reimbursed some of my transfer fees."
 
Some investors are hesitating to make the switch.

"I'm afraid to make a change."
"I am a bit apprehensive about the conversation."
"I feel sheepish, depressing, trapped…..I don't want to argue with someone who knows more than I do. I hope to gather the courage to take charge of my financial future in the coming weeks."
 
The high cost of mutual funds aside, some felt they had been well advised. Others had the opposite experience.

 "I thought I would get hands on pro-active investment advice from my insurance agent. Boy, was I mistaken."
"I was "bullied" into buying high cost mutual funds."
"The bank advisor said, "You don't have to pay for our advice…..it is all part of our bank's service". Hmmmmm. After that, with strong encouragement from my spouse, I decided to switch to index ETFs through an online discount broker while my wife went with a robo-advisor."
"I found out my account includes Deferred Sales Charge mutual funds. I was shocked."
"I came to realize I was dealing with a sales team."
"When we made it clear we wanted to transfer our accounts to our bank's online discount brokerage arm, our advisor said, 'but I don't get paid that way' and literally tore up all our investing info."
"The responses I received were unclear and included an 'attitude' and unprofessional emotionalism."
 
Most investors switched to "Do-It-Yourself", "Assemble-It-Yourself" or Robo investing while some found lower cost advisors or mutual funds. Some investors did quite a bit of research before selecting their new investment firm while others switched to a brand name they knew (for example, to their bank's own online service). Some also used fee only advisors for retirement planning. Here are some reader tips:

"Push your advisors to earn at least some of their fees by clarifying everything about your portfolio."
"I developed an investment plan well before making my first DIY trade."
"Young people should get personally involved in investing asap."
 "It is important to keep it as simple as possible."
"It was scary at first but knowledge and education made it much easier."
"You can start slow. I took a small amount of savings and set up an online brokerage account for a year."
"Taking the time to learn about investing is well worth it."
 "Yes, it is stressful. Regular day to day online transactions do not cause the same angst as transferring all your worldly possessions via the magic of the internet."
"No one else has your best interest at heart more than you do."
"Use the practice accounts through your online discount broker to familiarize yourself with doing real transactions."
"We paid a fee only advisor $1500 to help us with a retirement plan. We now know we can both retire.
 
If you want to know more about making a switch, check out page 101 of Beat the Bank for an example or just check it out online. I randomly googled the following:

https://questradesupport.secure.force.com/mylearning/view/h/Account/Funding+your+account
https://www.td.com/ca/en/investing/direct-investing/services/managing-your-money/
https://help.wealthsimple.com/hc/en-ca/articles/115000338808-How-do-I-transfer-an-existing-investment-account-to-Wealthsimple-
https://www.nestwealth.com/account-opening-process/
 
If you are considering switching to DIY or AIY investing, I suggest you read the second half of Beat the Bank again (starting on page 97) and check out the resources page on my website: https://larrybates.ca/resources/

Once again, many, many thanks to all those who took the time to share their stories!

Your feedback is always welcome. Just reply to this email.

Happy summer!!
 
Larry







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