June 8, 2013


fenced in
When you move, your advisor will likely want to keep you as a revenue stream. Is this really to your advantage? Long distance relationships face challenges.

Why Stay?

It's easy to stay with your old advisor since you don't need to do much beside provide a change of address. You can then spend your time on bigger decisions. You can get service over the phone or by email. You probably don't see your advisor often anyway. Perhaps your advisor will come to visit his/her clients in your new city on occasion. Maybe you go to the old city on occasion anyway and could meet then.

If your advisor spends money on client appreciation events, how do you attend? That’s probably not a big deal. Maybe service is.
Limited Choices
Suppose your advisor lives hours away and prepares a proposal for you to buy from Company A. If you want changes which make Company W a better choice, what happens if the advisor doesn’t have the proper paperwork? Will you be encouraged to buy from A or have to reschedule?
Suppose your advisor-from-afar returns home and then discovers that you missed a signature. What happens now? For 10 years, two advisors forged signatures “for their clients’ convenience to avoid clients having to attend to paperwork” (Toronto Star, Apr 2012). They were fired, paid $300,000 in fines and remain in business. Maybe you’d rather do without that “convenience”. In case you’re curious, WikiHow explains how to forge a signature.
When you buy life or health insurance, the coverage does not go into effect the day you’re approved. You must wait until you pay the first premium and sign the delivery receipt, which confirms that nothing material has changed (e.g., in your health). When your advisor is out of town, could your delivery be delayed?

Why Switch?

Your new local advisor will give you more attention in the beginning. Partially, that's an attempt to sell you something else. You don't need to agree but you may benefit from getting new options.

If you were observant, you'll have a sense of what bothered you about your old advisor. You can find a new one without those flaws.
I had a distant investment advisor send one of my blog posts to clients under his own name. I knew I had to switch then. You can't trust a plagiarist. We still haven't seen the resurrection of Jonah Lehrer or Chris Spence.
When you "buy local", you get better service and help the local economy thrive. You’ll likely pay the same or less.


Maybe you keep what you've got with the old advisor and get a new advisor for additional purchases. Now you can compare. That can help you switch to one later. In the meantime, won’t both try harder?

You'll get reasons to bundle your business with one advisor. That's clearly better for the advisor but how do you benefit. If you're using a true fee-only financial planner, where you have your financial products doesn't matter.

Advisors talk about "building a fence" around a client. That's done by selling you multiple products. The thinking is that inconvenience of switching makes you more docile.


When you move away, you’re older and wiser. You have an excellent chance to escape. Just say you'd rather deal with a local advisor. That's plausible and likely beneficial.


Podcast 223

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PS You'll probably want to find a local plumber and babysitter too.

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