How to break up with your finance professional

Break-ups are never easy. But if things aren't working out with your finance professional you don't have to stick around.

Relationships with finance professionals often work best over the long term as they get to know you and your needs. That said, there can be a variety of reasons why you may want to sever ties.

Simply ghosting your tax agent, financial planner or accountant isn't the solution. The key is to take a planned approach because there can be costs involved.

Know the 'why' behind your break-up

Mark Chapman, director of tax communications at tax agents H&R Block, points to a whole spectrum of possible reasons to part with a finance professional.

"If you believe you are not getting a good service - particularly if there is an unreasonable delay in dealing with work, the agent makes a mistake with a lodgement, gives you incorrect advice, or if your tax affairs become too complex for that agent to deal with, it can be wise to move to another agent," he says.

Chapman adds that a change of address can trigger a change in finance professionals though some services have offices around the country.

Or you may be able to have consultations over the internet. The upshot is that relocating doesn't have to spell the end of the relationship if you are happy to keep going.

Gavan Ord, from accounting body CPA Australia, takes a pragmatic view. He says, "Changing accountants is not uncommon, and can have many benefits for you and your business."

He believes switching to a new accountant "may offer a fresh perspective, identify areas for improvement or growth, offer new technology solutions and provide specialist advice on various matters".

Communication is key

According to Chapman it's preferable to confirm your intention to end the relationship in writing - either by letter or email.

"This can be proof if there is a later dispute," he says. The main thing is to explain that you are withdrawing permission for them to act on your behalf.

"You might want to accompany this with a conversation outlining the reasons you are leaving," says Chapman. "Or you could simply sign up with a new accountant who will handle the transition on your behalf."

Ord says it's worth checking the terms and conditions of your client agreement (if you have one) to be sure of your responsibilities, adding, "It's up to you to be clear on the date you want the relationship to end and ensure you settle any outstanding fees."

Beware of hidden costs

Breaking up to save on fees isn't always a sensible strategy. Chapman says moving to a new tax professional can mean saving on the cost of having a tax return completed. But it could also mean missing out on far larger tax savings if your current tax agent has a better understanding of all the deductions you can claim.

When it comes to moving on from a financial adviser, the picture can be more complex.

John Cachia, founder of Thriving Wealth, and the Financial Advice Association of Australia's 2024 Adviser of the Year, says it is important to recognise whether you actually have an ongoing relationship.

Many Australians may have spoken to an adviser for single-issue advice around, say, budgeting or saving for retirement.

Cachia explains, "Unless you have paid for ongoing advice - as opposed to one-off advice - you don't have an ongoing relationship."

That said, Cachia says advisers are increasingly opting for clients who are happy to commit to an ongoing relationship.

If you want to end this sort of relationship, he explains that most advisers will provide a summary of where you are at financially in terms of things like personal insurances and superannuation.

At that point, the adviser removes their ability to access your details from financial product providers, and will likely wish you the best of luck.

The catch is that some investment products can only be accessed through advisers. This can be the case with various platforms or 'wrap' accounts.

While the platform provider may allow you to maintain the account and underlying investments, without the backing of a financial adviser you could find some product features and functionality are no longer available.

Worst case scenario, if you choose to bail out of the platform or products, you could face a raft of costs including selling and buying investments, as well as potential tax implications arising from the sale of investments. This is something to discuss with an adviser before ending (or even starting) the relationship.

What about your personal records?

Finance professionals face strict legislative requirements around client record-keeping.

Cachia notes that for financial advisers, the Corporations Act requires that financial records are kept for seven years from the date a transaction is completed. There are similar requirements within tax legislation.

Ord notes that an accounting firm shouldn't use your data for purposes you don't want, unless they have a legal duty to disclose that information, for instance, in response to an enquiry from the Tax Office.

In terms of tax details, Chapman explains that documents produced by your agent such as working papers or internal file notes remain the property of the tax agent.

When it comes to long-standing documents such as trust deeds, your old accountant should hand these back to you.

"It is your responsibility to keep them," cautions Ord.

On the plus side, your finance professional may be bound by their relevant industry code of conduct to facilitate a smooth transition.

"In practice, this means that if you have received a formal financial plan in, for instance, the last 24 months, your old financial adviser may be open to sharing the details of this plan with your new adviser," says Cachia.

Get your timing right

Once you've made the decision to move on, chances are you will be eager to get the ball rolling. However, Chapman says it is best to wait until all ongoing assignments have been completed.

He explains that ending the relationship in the middle of an assignment can increase the fees you pay as your new professional may need to pick up a half-finished job and figure out where the previous person was up to. It all adds time - and money - to your final bill.

Want more about money and relationships? The May issue of Money, all about how to be financially fair with your loved ones, is out now!

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