What is an orphan client? 

Did you take out an investment or insurance plan with a representative and that representative has retired or left the business?  

Have you moved away from the place you originally set up investment or insurance accounts? 

Have you changed jobs and left retirement benefits behind? 

If you said yes to any of these, you may be an investment orphan.  Many people don’t realize they are “Orphan Clients.” This can lead to reduced service and possibly poor investment results.   

How can you know if you are an investment orphan?  

Looking at your investment statement is generally a great place to start. Statements are typically mailed quarterly or monthly. Your representative is usually listed somewhere on the first page.  If you don’t recognize the name or there isn’t a name, you could be an orphan.  Another indication that you could be an orphan is you no longer receive statements.  There can be several reasons for this but most likely they are being sent to an old email or former mailing address.  

Here are some of the most common reasons people become investment orphans: 

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. An advisor can lose their appointment with a company for something 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 retires: 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, those older advisors will surely retire someday. Sometimes advisors who retire have contingency plans that allow other advisors in the area to take over their business, like we have set up in our firm, but more likely than not, those accounts become orphaned. 

4)   The advisor passed away: Like the example above if your advisor passes away there needs to be contingency plans that allow other advisors in the area to take over their business, if one doesn’t exist those accounts become orphaned. 

5)   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. 

6)   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 it’s 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. 

I am taking new clients.  Please call 509-707-0311 or email mike@iwa.us to schedule a free initial consultation. 

My Value Proposition: 

As a Wealth Advisor, I work with individuals and families who recognize that making informed financial decisions today is a key component to long term financial prosperity.  I strive to act with honesty and integrity and to genuinely care about the success of the households I serve.  As a local, fee-based advisor my advice is not given to generate commissions. I am competent, professional, and able to explain complex financial planning topics in a way that can be easily visualized and understood so that my clients can have confidence that their financial strategy is well thought out and sound. 

The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice.  The investment strategies mentioned here may not be suitable for everyone.  

All investing involves risk including loss of principal.  No strategy assures success or protects against loss. Past performance is no guarantee of future results. 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice and financial planning offered through Financial Advocates Investment Management, DBA Integrity Wealth Advisors, a registered investment advisor. Financial Advocates Investment Management, DBA Integrity Wealth Advisors and LPL Financial are separate entities.