During the 2008 financial meltdown, big financial advisory firms gave advisers 3- and 4-year retention bonuses to keep them around. Now that time is up, so more brokers and advisers are on the move and want to take their clients with them. But such a move might cost you.
Eleanor Blayney of Certified Financial Planner Board of Standards, which certifies financial planners, says you should ask your adviser or broker whether your holdings will be transferable at no cost. In particular, if you purchased a proprietary product that can’t come over to your adviser’s new firm, you might have to sell it and incur commissions or even a loss.
Further, Blayney says, you should ask whether the terms of your underlying investments change because of the transfer. For instance, advisers might be able to transfer annuities tax-free, Blayney says, but such a maneuver also might reset the clock on your ability to access the funds without paying a surrender fee. That means that you would have to wait at least another 6 years before you can access your money again without paying a fee.
Blayney says that a reputable adviser will provide a written statement of the total cost of any transfer or exchange, the commissions that he/she will earn from it, and any changes in the surrender period or other term.