I Moved! Do I Need to Change Advisors?

I Moved! Do I Need to Change Advisors?

May 21, 2024

With the rise in remote work, it is not uncommon for families to move to another city, state, or even country! Without the need to be in the office every day the opportunities are endless. As such, we have clients in several different states including a growing number in Florida (Michigan’s Lower-er peninsula). Yet, the question is often asked: can I keep my financial advisor if I move away? There are a few considerations when answering that question.

 

Licensing

                As financial advisors we are required to have a number of different licenses (Series 7, 66, life insurance, etc.). The licenses that an advisor has dictates what kind of business they are allowed to engage in and where they are allowed to do business. The industry is rapidly moving towards advisory business with many advisors adopting that form of compensation instead of the more traditional commission-based model. The requirement to conduct advisory business is usually some combination of the Series 65, 63, and 66 however there is no state specific exam. This means that most states recognize an advisor’s license whether they live and work in the state or not. That said, if your advisor works with you solely on an advisory basis then they can likely continue to work with you even if you move out of state!

                If your financial professional is only licensed to conduct commissions-based business or insurance products then things get a bit more complicated. Some states require a state specific license in order to conduct commissions-based investment business in their state. Additionally, the cost to be licensed in a specific state varies and certain states (like Tennessee for example) charge an additional tax simply for the privilege to do business in their state! Depending on how many clients an advisor has in any given state, it may not make financial sense for them to pay for an additional license in the state you are moving to. Likewise, advisors need to acquire an insurance license in every state that they do business. If your financial professional only utilizes insurance products then this again might be a road block to them continuing to work with you.

 

Communication

                This is probably the most obvious consideration when you move away from your current advisor. If you continue to work together, how will that relationship look when you are hours apart? During the COVID-19 pandemic many, if not most, people learned how to use video conferencing technology such as Zoom or Microsoft Teams. For some people this was a welcome change but others still crave in-person connection.

If you have a long-standing relationship with an advisor who is well familiar with your specific situation then continuing to work with them by way of video conferencing and telephone calls likely makes a lot of sense. However, this might not be the case if you do not have a deep relationship with your advisor or simply if that relationship is newer. In this case, not being able to meet face to face may cause you some discomfort and present a barrier to continue working together. If it is not obvious already, there is no single right answer to this question and it is truly a matter of personal preference and opinion. I personally prefer to have the ability to see my clients in person (even driving several hours to go see them) however, having the ability to conduct annual reviews or quick meetings via Zoom is an extremely helpful option to have at our disposal.

 

Aggregation

                As you settle down in a new city, you may find that you really like working with a local advisor. This could be your company’s 401k advisor or perhaps someone that you have met through friends, social groups, or your church. There is nothing stopping you from working with more than one financial advisor! You are free to work with whomever you choose and are allowed to having more than one advisor. I myself have clients who have moved here from other states and still maintain investment accounts with their former advisor.

                That said, if you are going to proceed with working with multiple advisors it is highly recommended that you inform both advisors of your overall investment strategy. The last thing that you want is for your, “right hand not to know what the left hand is doing”. This could cause significant overlap in your investments, duplication of efforts, missed opportunities for fee reductions, tax issues and more. Ideally, you would choose to work with one advisor or the other and aggregate your investment accounts in one location. This eliminates that problem entirely!

 

                In conclusion, while moving to a new city, state, or country can be a major life change, it doesn't necessarily mean you have to change your financial advisor. Many advisors can continue to work with clients across state lines, especially if they operate on an advisory basis. The rise of video conferencing has made maintaining these relationships easier, though personal preferences for in-person meetings may vary. Additionally, clients are free to work with multiple advisors, though clear communication between all parties is essential to avoid complications. Ultimately, the decision hinges on your individual needs and the nature of your relationship with your advisor.