Advisor Fees Owed When You Leave: the Prorated Refund Nobody Asks For

Guides › Switching Financial Advisors

Updated July 31, 2026. Quick answer: it depends on one thing — whether your adviser bills in advance or in arrears — and the answer is already written down in a document you are entitled to. Form ADV Part 2A Item 5.D requires that “if your clients either may or must pay your fees in advance, disclose this fact. Explain how a client may obtain a refund of a pre-paid fee if the advisory contract is terminated before the end of the billing period. Explain how you will determine the amount of the refund.” If you were billed in advance and left mid-quarter, the refund method is not a favour you are asking for. It is disclosed policy.

Which situation are you in

Billed in advance — the common arrangement for quarterly percentage-of-assets billing. You paid at the start of the quarter for a quarter of service. Terminate in week five and you have prepaid roughly eight unused weeks. Item 5.D says the brochure must tell you how that comes back. Billed in arrears — you are invoiced after the period, so on the way out expect a final partial-period bill rather than a refund. Neither is better; they just produce opposite final transactions, and knowing which you have prevents both an unclaimed refund and an unexpected invoice.

Find the answer in your own documents, in five minutes

Open your adviser’s Form ADV Part 2A brochure — it is on the SEC’s adviser search, and the adviser must give you one on request — and read Item 5, Fees and Compensation. Item 5.B tells you whether fees are deducted from your assets or billed to you and how often; Item 5.D is the refund paragraph. While you are there, Item 5.A requires the adviser to “provide your fee schedule” and to “disclose whether the fees are negotiable.” The seven lines worth reading in any Form ADV, and the email that requests the current ADV and Form CRS. Then check your own advisory agreement for a notice period — a termination clause requiring, say, thirty days’ notice can mean the relationship formally ends after the date you stopped feeling like a client.

The sentence to send

Add this to your termination letter, which is where it does the most work: “Please confirm in writing the date advisory fees ceased, whether fees for the current billing period were charged in advance, and the amount of any prorated refund of pre-paid fees due to me under Item 5.D of your Form ADV Part 2A, together with the calculation used.” Asking for the calculation, not just the amount, is what makes the request checkable. Our termination letter generator produces the surrounding letter, and the receipt email is the follow-up that confirms billing actually stopped — the fee that never stops is a more common problem than the refund that never arrives.

Do not confuse this with the transfer fee

They are different charges from different parties. The advisory fee is your adviser’s compensation, governed by your agreement and Item 5. The transfer-out or account termination fee is charged by the custodian or broker-dealer holding the account, is published in that firm’s schedule of fees, and is not refundable — what switching costs. And a surrender charge on an annuity is a third thing again, written into the contract. The full exit sequence: how to fire a financial advisor.