# Best way to Break up with Financial Advisor



## showmethemoney45 (Feb 27, 2015)

So my parents have roughly $150k in Investors Group spread across 10 or so funds which seem to be mix of the same thing or another. From what I can tell online some have trailing commissions and some don't. I'm trying to persuade my parents into something with lower fees as I now believe they are being hosed. I think they are very old fashioned and naive, as well as uneducated in the mutual fund industry and just trust "Barb" or whatever the broads name is. If they wake up sometime soon and move their money to iTrade for example, how would they go about it gently to their "advisor?" They have known her a long time (just professionally) but I'm sure they know a lot about each other-she used to come to our house for crying out loud. I am reading horror stories about switching from IG. Should they find out which funds have trailing commissions and get everything in writing before switching? I'm hearing of advisors saying one thing and doing another. Should they move 1 fund at a time? In which case would they have to pay a switching fee for each fund? How should they approach the subject....start with the "its not you, its me?"

Cheers


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## Moneytoo (Mar 26, 2014)

I half-lied to our advisor: told him that both my husband and I have lost our jobs so are moving to self-directed accounts to save on fees (which were like $125 a year for each RRSP, plus all the trailing fees of course) The truth was only I lost my job, but we weren't that close with the advisor for him to know, and we parted amicably (besides, we were moving accounts inside the TD Waterhouse)


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## gardner (Feb 13, 2014)

You do not have to justify or even explain the reasons for moving; you just do it. If it were me, I would be thinking about:

(1) Decide where the investments will be held going forward -- iTrade, TDDI or what have you; set up and account; maybe buy $1,000 of XIC or something, just to get the basic familiarity out of the way.
(2) Ask the new broker about the mechanics of transferring stuff from IG -- transfers are initiated from the receiving side in most cases.
(3) Get the IG "advisor" to give a clear statement of what holdings have what DSCs (deferred sales charges) outstanding; generally DSCs will be gone after something is held for 5 to 7 years; 10% of holdings per year can generally be extracted regardless of DSCs; some fund-to-fund switches may have restarted the DSC clock, some not -- only IG knows for sure.
(4) Make a plan for moving the stuff -- things to think about here:
-- is a given holding registered or unregistered?
-- can a given thing be moved in-kind or in cash?
-- are there capital gains realization consequences?
-- how much can be moved free of DSCs, and how much DSC remains?

Once the holdings are in an account you can control properly, you'll have to decide what to invest in, so put some thought into that also. Some of the IG holdings may be able to transfer in-kind, but I suspect most will have to transfer in cash.


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## larry81 (Nov 22, 2010)

you do it as soon as you can and you do it in a single shot.

If your parents have no interest in money management, put them in Tangerine fund


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## Video_Frank (Aug 2, 2013)

There's no reason to ever tell your advisor - we didn't. We opened up accounts at a BMo branch for Investorline. We then called Investorline and had them move all of our MFs from our advisor's care into our accounts. Once the transactions settled we sold all of the MFs and bought our ETFs. We paid no transfer fees and we never heard from our advisor again.


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## gardner (Feb 13, 2014)

Video_Frank said:


> Once the transactions settled we sold all of the MFs and bought our ETFs.


Were the specialty IG funds able to transfer in-kind? I've never been clear on which, if any, IG funds trade with outside brokers.


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## showmethemoney45 (Feb 27, 2015)

Video_Frank said:


> There's no reason to ever tell your advisor - we didn't. We opened up accounts at a BMo branch for Investorline. We then called Investorline and had them move all of our MFs from our advisor's care into our accounts. Once the transactions settled we sold all of the MFs and bought our ETFs. We paid no transfer fees and we never heard from our advisor again.


I'm assuming they will have to have a conversation so I know which ones to move out first. If they have to pay big fees to quit early then it would be best to keep some of them where they are. I assume the new brokerage won't find out all those things for them, would they? They would probably want to move it over with the least amount of effort/time and not care about fees charged to me by the other guy...

Would a discount brokerage like iTrade help in something like this? Could they go into a Scotiabank for this? Or is face to face only for the high MER accounts?


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## gardner (Feb 13, 2014)

showmethemoney45 said:


> If they have to pay big fees to quit early then it would be best to keep some of them where they are.


No, not really. The DSCs decline on a schedule that starts at 0.5% in the first couple of years through to 1.5% to 0% in the 6th->7th. Even in the 5th and 6th year you save something like 2% in MER and give up 1.5% in DSC, so you're better to move immediately. The case for waiting is if you are close to an anniversary -- lets say you're a month away from a drop in DSCs from 3% to 1.5% -- it could be worth waiting a month, for the portion affected. 

It's possible to over-analyze -- if you have been making monthly contributions, the DSC anniversaries will be all over the place -- so the generic advise is just to hold your nose and go all at once.


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## showmethemoney45 (Feb 27, 2015)

gardner said:


> No, not really. The DSCs decline on a schedule that starts at 0.5% in the first couple of years through to 1.5% to 0% in the 6th->7th. Even in the 5th and 6th year you save something like 2% in MER and give up 1.5% in DSC, so you're better to move immediately. The case for waiting is if you are close to an anniversary -- lets say you're a month away from a drop in DSCs from 3% to 1.5% -- it could be worth waiting a month, for the portion affected.
> 
> It's possible to over-analyze -- if you have been making monthly contributions, the DSC anniversaries will be all over the place -- so the generic advise is just to hold your nose and go all at once.


I'm not sure if this lady has been moving their accounts around in order to start new DSCs. My parents are very financially illiterate and could easily agree to something like this...


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## Video_Frank (Aug 2, 2013)

showmethemoney45 said:


> I'm assuming they will have to have a conversation so I know which ones to move out first. If they have to pay big fees to quit early then it would be best to keep some of them where they are. I assume the new brokerage won't find out all those things for them, would they? They would probably want to move it over with the least amount of effort/time and not care about fees charged to me by the other guy...
> 
> Would a discount brokerage like iTrade help in something like this? Could they go into a Scotiabank for this? Or is face to face only for the high MER accounts?


I was holding ~ $100k in MFs from C I Financial. Investorline transferred them over for me, without fees since I had enough funds for the fees to be waived. I instructed Investorline, by phone, to sell them once the transfers settled out ( a few business days). Investorline did the calling to find out what the DSCs would be upon sale. Even if you chose not to sell (some, all or any), they would still be under your control in your own self-directed brokerage account.

I'm assuming iTrade or others would be at least as helpful as Investorline was with me. BTW, it was the best financial move I ever made.


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## Video_Frank (Aug 2, 2013)

_"Were the specialty IG funds able to transfer in-kind? I've never been clear on which, if any, IG funds trade with outside brokers."_

They were CI Financial Funds, not IG, but I assume they'd be similar.

Yes, everything transferred in kind. If my FA held x shares of a MF, then x shares transferred over and showed up in my account with Investorline. At that point they were mine to do whatever I wanted to, without any discussion with my ex FA.


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## uptoolate (Oct 9, 2011)

It's never a mistake to be too cynical. I agree with gardner that just biting the bullet and pulling the DSC funds regardless of the year they are in is sometimes the way to go just to get out from under the clutches of the advisor. Especially if you are paying a big MER for the fund too, not to mention that the fund is often underperforming its benchmark anyway. When my mom's funds were being moved from EJ to RBCDI her advisor, who she really felt bad about leaving, put her into a DSC fund with that year's TFSA money AFTER she had been given notice that the money was moving! So if possible, maybe no notice is best!


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## larry81 (Nov 22, 2010)

uptoolate said:


> When my mom's funds were being moved from EJ to RBCDI her advisor, who she really felt bad about leaving, put her into a DSC fund with that year's TFSA money AFTER she had been given notice that the money was moving!


how this is not illegal is puzzling


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## My Own Advisor (Sep 24, 2012)

Video_Frank said:


> There's no reason to ever tell your advisor - we didn't. We opened up accounts at a BMo branch for Investorline. We then called Investorline and had them move all of our MFs from our advisor's care into our accounts. Once the transactions settled we sold all of the MFs and bought our ETFs. We paid no transfer fees and we never heard from our advisor again.


Sounds familiar 

Good on you!

You don't give a reason other than you want to!


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## Marc (Jan 16, 2015)

My Own Advisor said:


> Sounds familiar
> 
> Good on you!
> 
> You don't give a reason other than you want to!


A few years back, I moved all my funds from my ex-advisor who was not providing the service I expected. In fact the service was virtually nil. My spouse did the same. Our new advisor handled the entire portfolio transfer without ever having to speak to the ex-advisor about any of it. The bottom line is that the investments belong to the investor (your parents) and they don't need to justify their actions.


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## uptoolate (Oct 9, 2011)

larry81 said:


> how this is not illegal is puzzling


I suspect that this would be a reasonable complaint to make but for the small amounts involved on 5k investment, it didn't seem worth it. And given that the investment would likely meet the 'suitability' standard and no explicit direction was given to freeze everything as the account was wound down... and given that the penalties given out by the body that governs FA's - they do self police right - are piddly. These people are the 'shavers of the golden crumbs' or 'nickels and dimes' if you prefer. Just finished reading 'Flash Boys'... this behaviour is institutionalized.


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## GreatLaker (Mar 23, 2014)

I split with my previous big-broker FA and moved to TD Direct in 2 phases. Phase 1 started with a discussion about performance, support/advice level, and fees. I did not make the progress I wanted, so I moved my non-registered and TFSA to TDDI. He actually suggested it (although I had decided to do it anyway by that time). I had him sell all the investments and got the $ in cash. Non-registered had a tax hit but I did not want to keep the investments. TFSA had no tax consequences because I timed it to withdraw the $ in Dec and deposit in TDDI the following January. He may have suggested I move the 2 smallest accounts thinking I would realize investing is too hard.

Phase 2 was to move RRSP and LIRA. For those I went to TDDI and asked them to open both accounts and arrange to sell all the existing investments and transfer in cash. TDDI needed to know what type of LIRA it was, so I ended up calling the FA's office and talking to his admin. He then called back to try and save the accounts. The performance reports they sent me quarterly showed the return trailing their own published benchmark by about the management fee, but even when I pointed that out to him, he would not acknowledge it. 

All four accounts transferred over without a hitch, and no regrets.

For the OP, consider asking the IG FA for a report on all the deferred sales charges, so you will know exactly what it will cost. Make them do the work.

Also you have not said much about what your parents think of this idea. If it is your idea, you should probably research the impact of fees on the long term value of a portfolio, and how simple a 3 fund ETF couch potato portfolio is to manage, so they realize it is in their best long term interest and how the financial industry creates a lot of product that is aimed only at making investing look hard and increasing their profits. Search for "The Arithmetic of Active Management" by William Sharpe. Also Vanguard has some good publications on the benefits of low cost investing.

Good luck.


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## indexxx (Oct 31, 2011)

This is not a marriage- simply move your money out. Do it by email or letter if need be. You don't 'owe' them anything. Quite the opposite; if they had your best interests at heart, they would inform you of the real cost of commissions over time. As per relationship advice- 'DTMF'.

"Dear Ms. Grasping: 

We have decided to divest the entirety of our portfolio from your company effective immediately. Thank you for your service and please be assured that this is simply a business decision and in no way reflects any dissatisfaction with yourself on a personal level. Please assist us in any relevant paperwork ASAP so that the transition may be as smooth as possible.

Wishing you continued success,

The Ripped-Off Consumer Family


-simple, painless, and to the point.


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## Echo (Apr 1, 2011)

Breaking up isn't hard to do: Here's how to transfer your accounts from one firm to another - http://www.boomerandecho.com/breaking-isnt-hard-transferring-your-rrsp/


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## showmethemoney45 (Feb 27, 2015)

indexxx said:


> This is not a marriage- simply move your money out. Do it by email or letter if need be. You don't 'owe' them anything.


I personally have no problem firing them or not even telling them. I would just be looking at doing it in a way so that they don't f*ck them over more.


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## thepitchedlink (Feb 17, 2014)

I did the exact thing a while ago, with IG. Just stop answering the phone when they call. Don't even tell your IG advisor what's up. To figure out what the DSC will be, just call IG head office in Winnipeg and ask then to tell you which funds have DSC's left and how much they are. Because IG funds are unique to IG, I had to sell then into a Money Market fund, then transfer out in-kind. Fill out the paper work with your new investment company...send it in and in a few weeks it will be all over. I did it all at once...it hurt, but once I made the decided to do it, I felt much better.......just do it


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## cman2 (Jan 14, 2011)

Before I transferred my funds to a discount brokerage, I met with my adviser. He was actually quite helpful in letting me know which funds no longer had DSC fees and where to send the paper work. I didn't do it all at once but transferred about half. Just to say that they aren't all bad.


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## 0xCC (Jan 5, 2012)

thepitchedlink said:


> To figure out what the DSC will be, just call IG head office in Winnipeg and ask then to tell you which funds have DSC's left and how much they are.
> Because IG funds are unique to IG, I had to sell then into a Money Market fund, then transfer out in-kind.


Ding, ding, ding! Check their account statements, there will be customer service phone numbers and account numbers on there. Give them a call and get all the information you need/want without talking to your advisor directly.

The second point is also a good one. Investor's Group is a special snowflake and their funds likely won't be able to be transferred in-kind to a brokerage account. So some moving of funds around probably needs to be done in order to do the transfer. It shouldn't be a big deal. However, as a Power Financial shareholder I'd like to see people stay with Investor's Group :biggrin:

Last summer I went through the same process with my own account with IPC (that was a smallish portion of my overall portfolio). I told my advisor that I would like to cash out of all my funds with them and they told me to contact the individual fund companies and do it myself. Just shows what sort of service they are interested in delivering. I wonder what happens to people in the withdrawal phase of their investing lifetime.


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