You've made the decision to move your advisory practice to a new firm. How do you maximize your ability to move your book of business from Old Firm (OF) to New Firm (NF)?
Tom Walrond, North Atlantic regional director with Raymond James & Associates (and a very successful recruiter in his own right) says, "The key to a successful transition is to thoroughly plan and prepare for moving your practice. The amount of time you invest on the front end is directly correlated to the success of the transition."
Since most of the employee advisor world is covered by the Broker Recruiting Protocol, I'll assume that this move is from one Protocol member firm to another. Your NF will have you talk with legal counsel about your pre-departure and post-departure behavior to keep you Protocol compliant.
Make no mistake: Ignore the Protocol at your own peril. The Protocol dictates that you are only allowed to take five data points about your clients. They are: Name, title of the account, address, phone numbers and email address. Your OF is watching you, looking for any perceived violation of the Protocol so it can take you to court and enjoin you from talking with your clients.
So how does a sophisticated practitioner move a large and complicated business, probably with multiple employees, while still adhering to a restrictive code of behavior? The answer is the transition spreadsheet. Every brokerage firm that is a member of the Protocol has its own version.
The basics are the same. Your NF is not allowed to have your clients' contact information until you are its employee. However, you will help the NF prepare client household-specific packages that are ready to be sent out once you resign. That is done with the transition spreadsheet.
Your client households will be unnamed but numbered, from 1 to 100, for example. The spreadsheet will contain information designed to identify the specific paperwork necessary to transition your clients. For instance, Client 22 might have a joint account with a spouse, a SEP, a Rollover IRA and three accounts in trust for minor children. The spreadsheet will also have room to identify pricing and product issues unique to that household.
NF will have packages prepared by the client number. Only you will have the master list that identifies Client 22 by the specific data points that the Protocol dictates that you may have. After you resign, you will let your NF know that Client 22 is Jane Smith. A key to a successful transition is the level of detail and accuracy in the transition spreadsheet and the ability of your NF's transition team to execute on its data.
The transition spreadsheet will force you to methodically examine the specific investments held in your clients' portfolios. You want to make sure that your NF can transfer the assets held at OF. If you have separately managed accounts, you want to ensure that NF has an agreement with the same money managers that you had at OF. Mutual funds? Make sure that NF has a selling agreement with the same funds, with the same asset classes, if possible. Structured investments? Make sure to ask the NF if the investment will transfer as is.
If you want to bring a trusted assistant with you, you must decide when you will tell him or her of your pending move. Indeed, most teams delegate the transition spreadsheet creation to a trusted, computer-savvy assistant. There are too many variables around the "when" and "what if" issues related to staff in a large practice to address them all here. Just know that it is always easier to move with an assistant whom your clients know and trust than it is to move without one.
While the transition spreadsheet is being compiled, think about the relationships that you have with your clients. Recall how you were first introduced to each client. Inevitably, you'll be led back to a core of influencers who are crucial to the success of your transition.
Because those influencers are so important, you will be tempted to clue them in about your move ahead of time. The Broker Recruiting Protocol explicitly forbids advisors from soliciting for your NF while still employed at your OF. How can you be sure of the loyalty of clients without whom you are out of business?
You need to have a Protocol compliant conversation. It goes something like this: "Jane Client, I get approached by other firms from time to time. If I were to change firms, are there any firms that you would not feel comfortable with me joining?"
Some clients will answer honestly. Most will say their relationship is with you, not the firm, and they will follow you. Some savvy clients will say, "Cut the crap, Joe Advisor. Where are you going and when will you be leaving?"
As uncomfortable as this is, you MUST tell them this: "Jane, I don't mean to be evasive. I have NOT made a final decision to go anywhere because without you and my other clients coming with me, the wrong decision will destroy my career. However, I am not allowed to explicitly solicit a client for a different firm from the one for whom I currently work. Please respect this."
Once you've canvassed your key clients, go down the list of advisors in your office. Some are truly your friends who would not dream of soliciting your clients upon your departure any more than they would consider kidnapping your child. But others have built their books on the crumbs of departing advisors. The worst of these vultures will say disparaging things about you, your reasons for leaving and your abilities as an advisor.
As you go through your households and prepare your transition spreadsheet, put yourself in the shoes of the biggest slime-bags in your office. If you were them, and you wanted to win the biggest clients in your book, how would you approach them? What are the weaknesses in your client portfolios over the last several years? How would you address these missteps with your clients if they confront you? Devise your responses and role play these conversations with someone on your staff or a friend. No experienced advisor has a perfect record of investment choices or of service to a client.
Finally, you need to have a tactical plan in place about how you will spend your first few hours, days and weeks. This is not a two-week-notice business. You will resign your position at OF at some time in the morning, typically on a Friday, and start at NF 20 minutes later (even sooner if you make all the lights). Upon your arrival at NF, your new manager will call your old manager for clearance on your license. You will be provided with a bunch of new hire paperwork.
Once your license has cleared and you are officially an employee of NF, you will be free to contact your clients. The aforementioned packages will be prepared to be overnighted to their homes. You will get on the phone. You must have a plan in place that scripts out which clients you call first. You must be diligent and prepared for your first phone calls. Your team must also be prepared to answer the questions your clients will have about the transition. If you are on the phone with Client 2, and Client 1 is on the other line returning your call, how will you handle the juggling? There are some clients that you will want to go and see to discuss the move. Plan, rethink and plan some more.
Moving a large, sophisticated practice is a daunting and intimidating task. It is a sprint that turns into a marathon. But if you have treated your clients well, with service, professionalism and a modicum of skill, you will be elated and self-actualized by their responsiveness and loyalty.
Danny Sarch is president of Leitner Sarch Consultants (leitnersarch.com),
a boutique search firm specializing in the wealth management industry.