How do I switch financial advisors, and what happens to my accounts?

You switch financial advisors by hiring the new one first, signing that firm’s paperwork, and letting the new firm pull your accounts over electronically. Most of what you own moves as it is, so a switch by itself does not sell anything or create a tax bill, and you do not need the old advisor’s permission.

People put this off because they picture an awkward phone call and a pile of tax bills. Usually it is neither. The mechanics are routine; the trouble hides in a few details.

What is the order of operations?

1. Check the new advisor first. Ask the questions you would ask anyone, then look the firm up on the SEC’s IAPD site at adviserinfo.sec.gov and on FINRA BrokerCheck; the Utah Division of Securities points you to the same two databases. Read its Form ADV Part 2A, which the form’s instructions say SEC and state rules require the adviser to hand you before or when you sign.
2. Read your current agreement. Find the termination clause and its notice period. If you paid fees in advance, Item 5 of Form ADV Part 2A must explain how the prepaid fee is refunded when the contract ends mid-period.
3. Sign with the new firm. You sign its advisory agreement and a Transfer Instruction Form for each account. As the SEC’s investor bulletin puts it, all transfers start and end with your new firm.
4. Keep everything identical. Same account type (joint to joint, IRA to IRA), same owners, same names. The SEC’s tips on avoiding delays say most delays come from a wrong or incomplete form, and that changing account type or ownership mid-transfer slows things down.

What actually happens to my accounts?

Most transfers between firms run through the Automated Customer Account Transfer Service, or ACATS. Cash, stocks, bonds, mutual funds, and listed options move through it routinely.

FINRA Rule 11870 sets the clock: one business day for the old firm to validate the instruction or flag a problem, then three more after validation to deliver. The SEC says a problem-free ACATS transfer takes about three to five business days once the new firm enters it.

Some things do not move on their own: funds the new firm cannot hold, proprietary ones especially, and private placements held at the issuer, not the broker. For a proprietary product, Rule 11870 makes the old firm list it in writing, ask you what to do, and disclose any redemption charges. And many firms will not release securities from a margin account with a loan outstanding.

Assets held off ACATS move manually and take longer. Do not ask the form to liquidate anything; the SEC advises the same, since a delay leaves you exposed to market moves. Decide what to sell after the assets arrive.

Will switching advisors trigger taxes?

Not by itself. An in-kind transfer moves the shares without selling them, so there is nothing to report. For taxable accounts, the IRS’s Form 1099-B instructions require the old broker to send the new one each covered security’s acquisition date and adjusted basis within 15 days of settlement. Check that it arrives.

For IRAs, the word that matters is transfer, not rollover. Per IRS Publication 590-A, a trustee-to-trustee transfer, custodian to custodian or by a check payable to the new custodian, is not a rollover, so the one-rollover-per-year limit and the 60-day clock do not apply. A check payable to you starts a 60-day rollover, and if you miss the window the distribution is generally taxable. Insist on trustee-to-trustee.

Taxes do show up when a new advisor sells everything on day one to fit its model. That is a choice, not a consequence of switching, and you can say no to it.

Do I have to tell my old advisor?

Not to get permission. The request goes to the custodian, which must act on it under FINRA Rule 11870; your advisor hears about it from there. If your agreement requires written notice, send a short email. You do not owe anyone a reason.

Expect a bill. The SEC warns that the old firm may charge for the administrative cost of the transfer, that a retirement account may carry a transfer-out charge plus a prorated custodial fee, and that the new firm may charge too. Ask both before you sign, and whether the new firm will cover them.

If the old firm drags its feet or the final statements do not add up, you can file a complaint with the Utah Division of Securities. By law, complaints are not public, and the Division will not act as your attorney to recover money.

If you are weighing a switch, a second opinion shows you what you would be moving before you move it: what you own, what it costs all in, what would transfer cleanly, and what I would change, if anything. The review is complimentary. In Utah, that conversation can happen at my office in Sandy.