Financial advisors can help you invest and manage your money. An advisor helps clients reach their long-term financial goals and often play an integral part in the retirement planning process.
But there’s one question many clients have: what happens to my money if something happens to my advisor?
Your advisor opens your accounts, sends you reports and provides a hands-off way to secure your retirement. If these individuals die or become incapacitated, your money will still be safe and will still be your money.
What Happens to My Money if My Advisor Retires, Gets Sick or Dies?
As an advisor, 90% of our clients ask us this very question. It’s an excellent question to ask, and it’s one that we want to clear up for you. No matter who you’re working with, the logic and answers will be the same across the board.
But before we get too far ahead of ourselves, it’s crucial to have a firm understanding of where your money is held.
Understanding Where Your Money is Held
When you work with us or any independent financial advisor, your money never enters our bank account. In fact, our name is never on the checks that you write. Instead, you assign us as an advisor on your account.
A third-party custodian will be where your money is held.
These custodians are massive financial institutions, such as Wells Fargo or Charles Schwab. The custodian will house your money, ensure everything is compliant and facilitate the trades.
As independent advisors, we:
- Act on your behalf when dealing with a custodian
- Never actually hold your money
If something happens to your advisor or us, your money will still be sitting in the custodian’s accounts that we created for you.
What Happens When Working with Big Financial Firms?
If you work with a big financial firm, you may assume that if your advisor is no longer working with the firm, you’ll be working with another internal advisor. And you will be working with another advisor, but it’s essential to understand that these firms operate in what’s called “teams.”
Teams have multiple advisors, so if something happens to the leading advisor, you’ll work with someone else in the company.
In fact, you’ll receive a call from your new advisor and will need to decide whether or not to work with the team without the advisor you had. Your money remains in place, and if you choose to leave the team, you can just transfer your money to another advisor.
So, in short: you won’t lose your money and can decide on what to do next with your portfolio.
Common Scenario Questions People Ask
Your money is important to you, and it’s essential to know the answers to common questions regarding your advisor:
What Happens if Your Main Advisor Dies?
First, you’ll get a new advisor. But the process will go something like this. You’ll receive a phone call and the new advisor:
- Will explain that they have been assigned to your account
- Likely have you come into the office to learn about him/her
You should ask to meet the advisor and go through the initial decision stages again, just like you did when choosing your original advisor. What this means is that you’ll want to:
- Talk to the advisor and see whether your personalities match
- Understand the advisor’s investment philosophy
- Decide if the philosophy is good for you
If you’re working with teams in the same office, you can be relatively confident that their philosophies will match. You won’t even need to worry about the investment strategy if working with an advisor from the same team.
This is the best-case scenario.
When working within the same team, your biggest concern will be whether the new financial advisor is a good fit for you. If the advisor isn’t a good fit, you can switch to another member within the same team.
What Happens If Your Financial Advisor Retires?
Retirement scenarios are a little different than if someone quits, gets sick or even dies. If an advisor is retiring, they’ll let their clients know well ahead of time. There is a lot of planning that goes into the retirement process, so you have many options as a client.
Your advisor can also choose to retire and:
- Sell their practice, in which case, you can begin working with the new team.
- Let the current in-house team take over the account. The long-term advisor leaves, but you continue working with the team that you’ve known for years.
If you’re concerned about your advisor leaving, it’s important to ask about their continuity plan for your team. You can ask your current advisor this question and ask this question when looking for an advisor.
Most advisors will have a plan in place to help you transition if they get hit by a bus tomorrow.
And a lot of people will shop for a new advisor when they know that their name advisor is going to retire.
We’ve had potential future clients come into our office, vet us thoroughly and explain that they plan to stick with their current advisor until that individual retires. You can follow this same concept because, at the end of the day, it’s your money that a new advisor will need to handle.
You’re not restricted to working with just the team that your old advisor built either.
You’ll work closely with an advisor, build trust and hopefully make a lot of money together. Then, if your advisor is hit by a bus or decides to quit tomorrow, there will be someone that can confidently fill their shoes.
Often, you’ll have the option of working with the advisor’s team that they were a member of to make the transition as fluid as possible. And in all cases, you’ll still have all the money you invested accessible to you.
Want to learn how you can secure your retirement? We have two great resources that we just know that you’re going to love and benefit from.Click here for our 4 Steps to Secure Your Retirement Course or listen to our Secure Your Retirement Podcast.