Key Takeaways:
- Changing investment advisors typically does not require selling your portfolio. Investments can transfer in kind and stay invested throughout the move.
- Moving the assets and changing the investments are separate decisions, so investment changes can wait until the board or committee approves a plan.
- Holdings that cannot transfer, such as some proprietary funds, can be identified in advance and their sale planned.
- Transition costs are typically modest, and for most tax-exempt organizations, selling at a gain generally does not create a federal income tax bill.
- The incoming advisor typically coordinates most of the work, and your organization mainly approves the change and signs the paperwork.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment, legal, accounting, or tax advice. The considerations described here reflect Raffa’s perspective as an investment advisor serving nonprofits and associations, and other advisors may weigh them differently. Raffa Investment Advisers is a registered investment adviser. Each organization’s financial situation is unique. Please consult with a qualified investment professional, and with your CPA or tax advisor on tax and accounting questions, before making financial decisions.
Once a nonprofit’s board or finance committee begins to consider a new investment advisor, questions about the move itself tend to follow. Will the portfolio have to be sold? Is this a poor time in the markets to make a change? What will it cost, and how much work will it create for staff and volunteers?
A nonprofit or association can typically switch investment advisors without disrupting its portfolio. This article covers what to expect when changing investment advisors, including what happens to your investments, what the transition typically costs, what your staff and committee will be asked to do, and what to ask prospective advisors before you choose one.
What Happens to Your Portfolio When You Change Advisors?
When a nonprofit changes investment advisors, its portfolio can typically move to the new custodian in kind (if a custodian change is necessary), without being sold, and stays invested throughout the transfer. In simple terms, the advisor changes, the custodian may change, and the investments themselves can stay the same until the board or committee approves a plan to change them.
The advisor makes or recommends investment decisions, while the custodian, typically a large brokerage firm or bank, holds the assets in accounts titled in the organization’s name. Our article on nonprofit investment management explains how responsibilities divide among the board, committee, advisor, and custodian.
What Is an In-Kind Transfer?
An in-kind transfer moves investments from one account to another as they are, rather than selling them and moving cash. For most brokerage accounts, the new firm starts the transfer, and the securities typically move within a few business days, although some may take a couple of weeks. While a full account transfer is in process, the account is typically frozen, so trades cannot be placed until the transfer is complete.
Most widely held investments transfer in kind. The exceptions tend to be investments tied to the firm the organization is leaving, such as its proprietary funds, and funds the new custodian does not offer.
| Holding | Typically transfers in kind? | What to expect |
|---|---|---|
| Individual stocks and bonds | Yes | Move to the new custodian as they are |
| Exchange-traded funds (ETFs) | Yes | Move to the new custodian as they are |
| Mutual funds | Generally, if the new custodian offers the fund | A fund the new custodian does not offer may need to be sold and moved as cash |
| Proprietary funds of the current firm | Often not | Identified in advance with strategies put in place as they relate to the timing of the sale and reinvestment of the funds once they arrive at the new custodian. |
| Cash and money market funds | Cash moves as cash | A money market fund the new custodian does not offer is typically redeemed and moved as cash |
Do You Need to Change Your Investments Right Away?
A nonprofit does not necessarily need to change its investments at the same time it changes investment advisors. Transferring the assets and changing the investments are two separate decisions. The portfolio can generally come over as it is while the new advisor reviews the organization’s financial documents, current investments, reserve policy, and investment policy statement to gain an understanding of where everything currently stands. Depending on the services engaged, the advisor can then work with the committee to review and update both the reserve policy and Investment Policy Statement (IPS) if necessary, to align them with the organization’s objectives, risk capacity, and risk tolerance.
What Onboarding With a New Advisor Includes
Onboarding with a new investment advisor can involve more than moving the accounts. Some advisors focus mainly on the operations side, while others, particularly those engaged in a broader outsourced chief investment officer (OCIO) role, may also include a detailed review of the organization’s reserve policy and investment policy statement to confirm alignment with the organization’s objectives.
As an OCIO, Raffa handles both parts of onboarding at the same time:
- Operations: This covers the account work: opening new accounts in the organization’s name, completing the transfer paperwork, confirming who is authorized to sign, and setting up access to statements and online reporting dashboards.
- Reserve and investment policy review: This typically happens at the start of the relationship, while accounts are being opened and moved. It looks at how much the organization should hold in reserves and how much risk those reserves can take on, as well as whether and how reserves should be divided into pools by purpose and time horizon. From there, the advisor works with the committee to update both the reserve policy and the investment policy statement (IPS) to reflect those decisions, with the reasoning documented.
Is There a Good Time to Switch Investment Advisors?
Market conditions generally do not need to drive the timing of a switch, because a portfolio that transfers in kind stays invested during the move. Timing would matter if the portfolio had to be sold to cash and reinvested later, leaving it out of the market for part of that period. A transfer in kind avoids this step, and any holdings that must be sold are identified in advance so the sale and reinvestment can be coordinated.
The schedule that matters more is the organization’s own, such as when the board or committee meets to interview finalists and approve the new advisor agreement.
What Does It Cost to Change Investment Advisors?
In our experience, the direct costs of changing investment advisors can be modest. Costs that may arise can usually be identified in advance:
- Account transfer fees, which the firm releasing the assets may charge for each account it transfers. Investor.gov, the SEC’s investor education site, advises asking both the old and new firms about their fees.
- Trading costs on any holdings that must be sold because they cannot transfer. Being invested in proprietary funds or funds that charge a fee when sold can add to these costs, which is why it helps to review holdings before the transfer.
- Fees owed under the current advisory agreement as stated in the contract.
Are There Tax Implications When Transferring Investment Accounts?
Holdings that transfer in kind are not sold, so the transfer itself generally does not create a tax bill. For most tax-exempt organizations, gains from selling investments are generally excluded from unrelated business income tax, according to IRS guidance,¹ though private foundations are subject to a separate excise tax on net investment income,² and gains from debt-financed property may be taxable. Confirm the tax treatment with your CPA before selling any investments.
Considering a change in investment advisors?
Talk with our team about what a transition would involve for your organization.
What Will Your Staff and Committee Need to Do?
Your staff and board or finance committee will generally need to provide requested information and required signatures, while your incoming advisor typically coordinates most of the work. Most documents can typically be signed electronically. The organization is typically asked for items such as:
- Board or committee approval of the new advisor and agreement
- Authorized signers
- Recent statements for each account being transferred
- Financial statements, the budget, and current reserve and investment policies
If a treasurer or staff member named on the current accounts has rotated off the board or left the organization, updating the signer list is typically part of the first round of paperwork.
The outgoing advisor generally does not need to be involved in the transfer, as the receiving firm is typically responsible for managing the process. Exceptions can arise with proprietary holdings or other account-specific circumstances.
Questions to Ask When Changing Investment Advisors
When evaluating a nonprofit investment advisor, the questions worth asking about the transition are the ones that show who will coordinate it, how the existing holdings will be evaluated, and what decisions the committee will be asked to make. These questions are best asked during the interview process before signing a contract with the selected firm:
- Will you coordinate the transition from start to finish, and what will our staff and committee need to provide?
- Which of our holdings do you expect to transfer in kind, and which may need to be sold?
- Which parts of onboarding do you handle, and does that include a detailed review of our reserve and investment policies as they relate to our financial situation and objectives before you recommend changes?
- What is the typical timeline, and how will you keep staff and the committee informed?
These questions fit naturally into your request for proposals (RFP) or later in the process, during or immediately after finalist presentations.
Download our Sample Investment Advisor RFP Template
Our sample investment advisor RFP templates were created specifically for nonprofits and associations to help committees begin the search process. Each template is fully customizable and covers the organization’s profile, the services it is seeking, the selection schedule, and questions for prospective firms.
How Raffa Can Help
At Raffa Investment Advisers, we serve as investment advisor to nonprofits and associations, including in an OCIO capacity that pairs discretionary investment management with reserve strategy, investment policy development, and ongoing governance support. When your organization transitions to Raffa, your Client Service Manager handles the account paperwork and any in-kind transfers. At the same time, your lead advisor works with your committee to review and update your reserve and investment policies and, depending on your holdings, develop a plan for any assets that may need to be sold. After onboarding, a dedicated advisory team manages your portfolio and works with your staff, committee, and board to help keep your investments and policies aligned with your organization’s financial situation and objectives over time.
Meet with our team of advisors experienced in partnering with nonprofits and associations.
Frequently Asked Questions: Changing Investment Advisors
Is It Difficult for a Nonprofit to Change Investment Advisors?
How difficult it is for a nonprofit to change investment advisors depends largely on its holdings and how the transition is coordinated. Most holdings can transfer in kind, the incoming advisor and custodian can handle most of the paperwork, and investment changes can wait until the new advisor has reviewed the portfolio and policies with the committee. The process can involve more steps when a portfolio includes investments that cannot transfer in kind, such as proprietary funds, which typically need to be sold and the proceeds reinvested.
How Long Does an In-Kind Transfer Take?
An in-kind transfer generally takes a few business days to a few weeks once the receiving firm submits the request. Opening the new accounts and collecting signatures typically takes longer than the transfer itself, so timely responses from staff and board members can help the process move more quickly. At Raffa, account setup and the asset transfer typically take about two to three weeks.
Do We Need to Tell Our Current Advisor Before the Transfer?
An organization will typically give notice to its current advisor under the terms of its existing advisory agreement, but it generally does not need that advisor to move the assets, because the receiving firm initiates the transfer. Reviewing the agreement’s termination terms early can help the committee plan the timing.
Who Approves a Change in Investment Advisors?
A change in investment advisors is typically approved by the board. When a finance or investment committee oversees the portfolio, that committee may lead the search, interview the finalists, and bring its recommendation to the full board for a vote. The organization’s bylaws or committee charter usually set out how the process works.
Do We Need an RFP to Change Investment Advisors?
A nonprofit does not necessarily have to go through a formal request for proposals (RFP) process to change investment advisors. A committee can issue a formal RFP or request standard proposals or presentations from selected firms. Each approach has its trade-offs. An RFP is most useful when a committee wants comparable information, using a defined scope of services and list of questions, from multiple firms or a documented record of how the advisor was selected. Our guide to writing an investment advisor RFP covers when to use one and how to structure it.
About the Author
Dennis Gogarty, CFP®
Dennis Gogarty, CFP® is President and Co-Founder of Raffa Investment Advisers, a firm he purpose-built to serve nonprofit organizations and membership associations. For more than 20 years, he has advised nonprofits and associations on fiduciary-focused reserve strategy, investment policy development, asset allocation, and governance best practices. Raffa currently serves nearly 200 nonprofit clients nationwide, as of June 30, 2026.¹ Dennis is a frequent speaker for nonprofit and association audiences and has presented for organizations including the Council on Foundations, AICPA, BoardSource, and the American Society of Association Executives (ASAE).
¹ IRS, “Unrelated Business Income Tax – Exceptions and Exclusions,” irs.gov, last reviewed October 9, 2026.
² IRS, “Tax on Net Investment Income,” irs.gov, last reviewed September 11, 2026.
³ Client count is as of June 30, 2026, and reflects the number of nonprofit clients for which Raffa provides portfolio management, retirement plan advisory, or ongoing investment consulting services. Client count is based on unaudited internal recordkeeping and custodial data from Charles Schwab & Co., Inc.
Disclosures:
Portions of this article were drafted with the assistance of AI tools and reviewed by Raffa Investment Advisers staff for accuracy and compliance.
Raffa Investment Advisers is a registered investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Any forward-looking statements are based on current expectations and are subject to uncertainties.
Timelines described in this article are typical and not assured; actual timing depends on each organization’s circumstances, its current custodian, and the documentation required.
References to tax rules and account transfer rules are general and educational. Rules vary by organization type and change over time, and organizations should consult their CPA, tax advisor, or legal counsel about how they apply to their circumstances.
This article is for informational purposes only and should not be construed as personalized investment advice.