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Orphaned Accounts: What Happens if You no Longer Have an Insurance or Investment Advisor?

One of the issues our clients face in our industry is what we call “Orphaned” accounts. These are accounts that were originally set up by an advisor, and that advisor is no longer active on the account. There are many reasons that may happen, but here are some of the most common reasons:

1)   The advisor is no longer in the business: Unfortunately, our industry has a bad habit of recruiting as many people as possible and see what happens. Especially with 403(b) and 457 plans, the advisors are typically brand new to the business, and many do not stay in the business very long.

2)   The advisor is no longer appointed with the company: This is very common. The reason why your advisor is no longer appointed with a company could be one of many reasons. Those reasons could be as simple as they haven’t used that company in a while, to as complicated as they were terminated because of malpractice.

3)   The advisor passed away: Many people start working with an older, experienced advisor when they’re in their 30’s and 40’s. While that is great because you get those years of experience and knowledge, sometimes, unfortunately, those older advisors may pass away before or during your retirement. Sometimes advisors who pass away have partners that can take over their business, like we have set up in our firm, but more likely than not, those accounts become orphaned.

4)   You’re with a captive company: It is very common for the larger retirement companies to make people captive advisors. Meaning that if they ever leave their firm, the clients stay with the company and now they don’t have to pay an advisor to service it, leaving you with an “800 number” to call into if you ever need help.

5)   You don’t meet the company’s minimums for investments: Recently many large brokerage firms have adopted a policy to only provide advisors to individuals with over a certain amount of money invested with them. This amount is typically $250k to $500k depending on the firm, and if you fall short of that amount you may have an orphaned account rather than be assigned to an advisor.

So, what happens if you’ve fallen into this situation like millions of other people? Well, you have a few options depending on your situation:

1)   Assuming you want to keep your current account as is, you can see if you can add a new advisor to your account. This is what my firm does with many orphaned accounts, we run into. If they’re good for the client, we simply become the agent of record, and then we can help the client without any changes or fees to them.

2)   If you want to keep your account as is, but they won’t let you add an independent advisor, you can call the company and ask for someone to be added to your account

3)   If you’re not satisfied with your current account or the company won’t add someone for you, then you may want to move the account somewhere where you can actually have a financial advisor that you can meet with and go to if you have questions.

If you have an orphaned account and are feeling abandoned on it, contact our office and we’d be glad to look into it and let you know what your options are.

Securities and advisory services are offered through Madison Avenue Securities, LLC (“MAS”). Member FINRA/SIPC and a Registered Investment Advisor. Anders & Anders Financial Group and Madison Avenue Securities, LLC are not affiliated entities.