I'm not sure if this question is appropriate for you, but here goes.
I received a letter last week from my investment adviser in which he stated that he was transferring my portfolio, along with that of others, to a person who recently joined his firm. Prior to this, in 2005, I was switched to this particular adviser when he himself joined the firm. I understood from my first adviser that this was part of a succession plan, in that the first adviser was planning on retiring in a few years.
Now, however, my soon-to-be ex-adviser is advertising for new clients in a local newspaper. I am left thinking that a) my portfolio, which is relatively modest, is being used as part of the enticement package for the soon-to-arrive adviser and b) once advisers get established, they position themselves to "cherry pick" clients who will have larger portfolios, hence profits for them.
Am I being cynical, or is this a common practice within the industry?
There could be a couple of reasons for you being transferred to another adviser. The advisor may have decided to have a minimum portfolio size that he manages, or he may have changed his investment style or strategy that may not fit with yours. There could potentially be other reasons, too. My best advice is to ask him if you are really concerned or curious. Meet with the new adviser he suggests and ask relevant questions like, experience, qualifications, investment style and strategy, etc. You are not obligated to go with this new adviser.
Remember it is your money, your financial future, and your choice of who helps you achieve your goals.
From my experience, I cannot say it is a "common practice" in the industry. Each adviser operates with their own individual business practices in different ways (and hopefully staying within the industry rules).
Interview advisers until you find one that best suits you.
Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. To ask her a question, send an e-mail to firstname.lastname@example.org or visit her web site at nancywoods.com
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