When something changes
My firm merged, or the fees changed. What should I check?
The envelope is thicker than usual and the first line is “We are pleased to announce.” Your firm has been acquired, or has acquired someone, or has a new parent, or is moving your accounts to a new platform, or has revised its fee schedule. Somewhere on page three is a sentence saying that if the firm does not hear from you by a date, you agree. Nothing is on fire; most of these letters are, for the client, roughly neutral. But a letter that treats your silence as a signature deserves to be read the way the firm’s lawyers wrote it. This is the reading guide.
What a merger changes, and what it does not
The announcement frames the event as a name change: same advisor, same office, new logo. Sometimes that is exactly right. But several things can move in a merger that the letter does not dwell on, and they are worth naming because each one lands on you rather than on the firm.
The custodian may change. If the acquiring firm clears through a different broker-dealer or bank, your accounts are re-registered there: new account numbers, a new login, new statements, and new paperwork for anything that referenced the old numbers, from beneficiary forms to standing transfer instructions. The house models and the product shelf may change. The acquirer typically has its own model portfolios, its own approved-fund list and often its own proprietary funds, so a review of your holdings tends to follow within the year, and a recommendation to “align your portfolio with our platform” is a sale with a tax consequence in a taxable account. The advisor’s payout grid may change, and with it the incentives: the acquirer’s grid decides what an advisor is paid for advisory assets, for banking referrals, for the parent’s own products. None of that appears in the letter, but it shapes what you hear recommended over the following year.
What does not change on its own is the standard of conduct on each account. An advisory account carries a fiduciary duty under the Investment Advisers Act; a brokerage account carries Regulation Best Interest, in force since June 2020. A merger does not move an account from one standard to the other. The paperwork can, though. A conversion often arrives with new account agreements, and a brokerage account can be re-papered into an advisory program, or an advisory account into a brokerage one, with a different fee and a different duty attached. The account type after the paperwork is what decides the standard, which is why the paperwork is the thing to read.
Three letters, one at a time
The three notices look alike and mean different things. Each tab covers what changes, what to check, and the one question worth asking before the date.
What changes
Ownership, and everything that flows from it: the payout grid, the model portfolios, the approved-product list, possibly the custodian and the account numbers. The advisor may be under a retention agreement that expires in a year or two. The relationship summary is now a different firm’s document.
What to check
Whether the custodian changes and, if so, whether every account, including the small ones, is on the transfer list. Whether any holding is being sold to fit the new platform, and what that costs in tax this year. Whether the account type on each account is the same after the new agreements as before. Read the new Form CRS next to the old one, conflicts section first.
The one question
“Which of my accounts will be re-papered, and does the standard of conduct on any of them change?”
What changes
Some line in what you pay, and the letter will typically describe the change in its most favourable light. A schedule can be “simplified” by removing a breakpoint you were about to reach. A wrap fee can be “updated” by moving something it used to include into a separate charge. A sweep can be “enhanced” by moving your idle cash to a bank deposit program that pays less.
What to check
Every number on the old schedule against the same number on the new one, and every item that was inside the fee against the new list. Then the last statement: apply the new schedule to your actual balances and see what the quarter would have cost. A change that reads as small in basis points is a real amount in dollars on a large account.
The one question
“On my accounts, at my balances, what did last quarter cost under the old schedule and what would it cost under the new one?”
What changes
The system your accounts live on, which sounds like the firm’s problem and is partly yours. Account numbers, the login, statement format, the cost-basis method on each account, automatic features such as dividend reinvestment and periodic transfers, and access to history. Old statements may move to an archive, or off the site altogether.
What to check
That the cost basis on every lot carries across and matches, that noncovered lots and any basis you adjusted by hand are not reset, that beneficiary designations and standing instructions survive, and that you have downloaded every statement, confirmation, tax form and gain-and-loss report before the cutover date, not after.
The one question
“After the conversion, how far back can I see my own history, and what do I need to download before then?”
How to read a fee-change notice
A fee notice rarely says that your fee went up. It says a schedule was updated, harmonized or aligned, and leaves the arithmetic to you. There are seven places a change can hide. The advisory fee schedule itself: the rate on each tier. The breakpoints: the asset levels at which the rate steps down, because moving a breakpoint changes your cost without changing a single rate. The platform or program fee, charged alongside the advisory fee. The sweep program: where your uninvested cash sits and what it pays, which after a merger often becomes the parent bank’s deposit program. The lending rate on any securities-based line, quoted as an index plus a spread, where the spread is the part that moves. Transaction fees: ticket charges, trade-away fees, fees on funds outside the preferred list. And the contents of a wrap fee: whether it now includes or excludes something it used to, such as trading costs, planning, or the fee on the firm’s own funds.
The same notice reads differently once you know what each sentence is for.
The opening
“We are pleased to announce that we have joined a firm whose scale and resources will benefit our clients.”
The fee line
“Effective on the date below, our advisory fee schedule will be simplified and harmonized across all client accounts.”
The consent line
“Clients from whom we do not hear by the date below are deemed to have consented to the assignment of their agreement and the updated terms.”
The closing
“No action is required on your part. Your advisor remains your point of contact.”
The opening
Ownership changed. The payout grid, the models and the product shelf are now the acquirer’s, and the relationship summary you were given is superseded.
The fee line
The numbers moved. Which numbers, and in which direction on your balances, is in the schedule attached, not in the sentence. Simplified often means fewer breakpoints.
The consent line
Your agreement is being handed to a new firm, and the firm would like your silence to count as a yes. You may say no, ask questions, or move. The date is when the new terms start, not a deadline for you.
The closing
No action is required for the change to happen. Action is required if you want to understand it first. The advisor may be the same person under a different grid.
Reading it well means reading it next to something. Pull four things before you form a view: the old and new Form CRS, the old and new fee schedule (or the fee section of each firm’s Form ADV Part 2 brochure), your last statement, and the conversion FAQ if there is one. The first two tell you what changed on paper, the statement tells you what it costs on your balances, and the FAQ tells you what the firm already knows people are going to ask.
What the consent date actually means
The clause is called negative consent: if you do nothing, you agree. It is a common and legitimate device with a reason behind it. An advisory agreement generally cannot be handed to a different adviser without the client’s consent, so when ownership changes the new firm needs a yes from every client, and asking thousands of people to sign something is slow. Treating silence as agreement is the shortcut. That tells you what the date is and what it is not.
It is the date the new terms take effect. It is not a deadline by which you must decide anything. You can decline, which usually means the accounts go elsewhere, or stay on the old terms if the firm offers that. You can ask questions in writing and expect answers in writing. You can move before the date or after it; a transfer works the same way either way, and nothing in the notice creates a duty to act. The only thing that happens on the date is that the terms in the letter become the terms you are on. If those terms are fine, that is a fine outcome.
Silence is a signature. A signature can be withheld.
Negative consent works because most people do nothing. Doing something means reading the schedule and asking two questions in writing. It does not have to mean leaving.
What a platform conversion does to your history
A conversion is the quiet one. The advisor is the same and the fee may be the same, but your accounts are being lifted from one system and set down in another, and history does not survive that trip on its own. Cost basis should carry. Custodians have been required since 2011 to track and transfer the basis of covered securities, and a conversion between systems typically carries it lot by lot. The gaps are the usual ones: noncovered lots bought before the rules, basis adjusted by hand after a gift or an inheritance, and positions whose accounting method was set to something other than the default. Those are the lots to reconcile the week after cutover, against the statement from the week before.
Statements are the other loss. Old statements, confirmations and tax forms may move to an archive with a different login, stay available for a limited window, or simply not be there. Before the cutover date, download everything: every statement back to the account opening, the tax forms, the realized gain-and-loss reports, the cost-basis detail by lot, the beneficiary designations and the account agreements. It takes an afternoon and cannot be done afterward. Check the automatic features too: dividend reinvestment elections, periodic transfers, required-distribution schedules and standing instructions are the settings most often reset during a conversion, and the first sign is usually a missed transfer.
If your advisor leaves in the wake of it
Mergers shake advisors loose. Some leave in the first months because the new grid or the new models do not suit them; others leave when a retention agreement expires a year or two later. If that happens, the next letter is a different letter, and it has its own page: My advisor just left the firm. What now? The short version is that the accounts belong to the firm, so you are reassigned unless you choose otherwise, on your own timetable. Reading the merger notice carefully now means you already hold the documents that page asks you to pull.
Before the consent date
What is worth doing between opening the envelope and the date on page three. None of it commits you to anything.
When the right response is to file the letter
Often. Many mergers are neutral for the client: same advisor, same custodian, same schedule, a new logo on the statement. A fee decrease is a fee decrease, and some notices are exactly that. A platform conversion can bring better reporting than the system it replaces. If the schedule comparison shows nothing moved against you, the account types are unchanged, the custodian is the same and your history is downloaded, the right response to a good notice is to file it. Nothing on this page is an argument for leaving. It is an argument for knowing what you agreed to.
What the exercise does show is how much of your arrangement depends on decisions the firm makes about itself. An independent, fee-only firm is built so that fewer of those decisions reach you. There is one fee schedule, public in the firm’s Form ADV Part 2 brochure rather than in a letter. There is no parent whose grid or product shelf can change what is recommended, and no revenue from anything but the fee. And the custodian does not change when the advisory firm does: our clients’ accounts are held at Charles Schwab or Fidelity, in their own names, so a change at our firm would not move a single account number. The fair follow-up is that a small firm can be acquired too, and any client of one should ask what happens then. Our answer is that the accounts stay where they are, the consent letter would still be required, and the two founding principals and team of seven would rather discuss continuity in the first meeting than have you learn about it from an envelope.
The principle to carry
A notice that asks for your silence is asking for something. Give it a reading instead: the two schedules side by side, the two relationship summaries, the last statement, and the one question for the kind of letter it is. Most of the time the answer is to file it. When it is not, you have the documents already in hand, and the date on page three was only ever the day the terms began.
Aspirean is an independent, fee-only, fiduciary wealth management firm with offices in Marin County, St. Joseph and Chesterton. If a letter like this arrived, we would rather read it with you than have you guess at what it means.
Frequently asked questions
What does negative consent mean in a letter from my financial advisor?
It means that if you do not respond by the stated date, the firm treats you as having agreed to the new terms, usually the assignment of your advisory agreement to a new firm or a revised fee schedule. The device is common and legitimate. You can decline, ask questions in writing, or move your accounts, and the date is when the new terms take effect rather than a deadline by which you must decide.
Does my advisor still owe me a fiduciary duty after the firm is acquired?
The standard of conduct follows the account type, not the ownership of the firm. An advisory account carries a fiduciary duty under the Investment Advisers Act and a brokerage account carries Regulation Best Interest, and a merger by itself does not move an account between them. New account agreements can, so check whether any account is being re-papered from one type to the other as part of the conversion.
What should I compare when my firm changes its fee schedule?
The old and new schedules line by line: the rate on each tier, the breakpoints, any platform or program fee, the cash sweep program, the spread on a securities-based line, transaction fees, and what the wrap fee includes. Then apply both schedules to the balances on your last statement so the change is a dollar amount rather than a description. A fee decrease is a fee decrease, and some notices are exactly that.
Will my cost basis and old statements survive a platform conversion?
Cost basis for covered securities should carry across, since custodians have tracked and transferred it since 2011, but noncovered lots and any basis adjusted by hand are the ones to reconcile afterward. Old statements, confirmations and tax forms may move to an archive or become unavailable, so download everything before the cutover date, along with beneficiary designations and the account agreements.
This piece is general education, not individual advice.
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A second opinion on a merger or fee notice starts with the old and new documents side by side: what moved, what it costs you, and what the consent date does and does not require. You leave with the list, whatever you decide.
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