Ask Paul: My planner is changing my portfolio and I don't understand why

Dear Paul,

I have been with my financial planner for about 10 years. I am retired.

Across the financial planner's company they are planning major changes to everyone's portfolios.

I don't have any insight now on the exact changes, but they could be selling the whole portfolio and repurchasing new.

Some will be the same but with a different name. My husband and I are very uncomfortable with this. We thought the best way to manage a portfolio is to look at the long term. 

They say they will be saving us fees in the long term. Not sure what other benefits there will be.

The planner's approach is to bombard us with numerous lengthy documents, asking us to get back to him with any questions. Between us, we have more than $2.5 million invested. Any suggestions? - Cheryl

Yes! Cheryl, you have set off about every alarm bell in my mind.

You have a very large amount invested and it is critical that you understand exactly what is going on here. If you have been with your planner for 10 years, it is reasonable to assume you have been happy with the advice. Any reputable firm would only be making such a significant change, seemingly for all its clients, for a strong reason.

What you need to do to get to the bottom of this is work out whether it is good for you or good for them, or does it benefit both the firm and you? It may be that they are moving to a new, lower-cost platform, from individual securities to low-cost ETFs or indexed funds. Exactly what fees are they saving you?

I would strongly recommend you set a time to sit down with your adviser, forget the reams of paperwork and ask what the changes are for, how do you benefit, how does the adviser and the firm benefit, what are the tax implications if your investments are sold and repurchased?

The key to this is understanding the big picture. If, in fact, it is a lower-cost, more effective way for you to hold your investments, with no tax or security issues for you, then maybe this is a good thing. But I simply don't know and my alarm bells are still ringing strongly.

If, after your meeting, you are not absolutely certain about what is going on, this is not the time to scrimp on professional advice. You have a very large investment portfolio. It may take some hours of your accountant's time, or another professional you trust, but do not hesitate to get a second opinion if you are in any doubt whatsoever about what is going on.

Just your words "some will be the same, but with a different name" make me shudder. Is this proposed to be a trustee company?

You need to understand exactly what is going on here. It may be very much to your benefit and given the length of time you have been with your planner, it is quite likely these changes will benefit you. But if it is not crystal-clear in your mind, please get a second opinion.

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