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What Financial Advisors Need to Know Before Changing Firms

Many financial advisors reach a point in their careers during which they consider leaving their current firm or trying something different. The transition process for financial advisors differs greatly from that of other industries, where an employee gives the traditional two-weeks notice, as it can take months or even years to appropriately prepare for moving your practice to a different broker-dealer or RIA. 

On top of that, maintaining the optimal degree of discretion around your aspirations is critical to ensuring as smooth of a transition as possible. If you are considering a transition to another firm, here are 12 best practices to keep in mind: 

  1. Understand the transition process and what you can expect. This step-by-step transition guide details the time most advisors dedicate to preparing and conducting due diligence on different firms. With roadmaps and action steps for navigating transitions, it is also a great resource for advisor teams who want to understand their options related to making a transition together. 
  2. Photograph (rather than download) a recent statement of your revenue, assets, and rep agreement using your phone. Why? Downloading or printing such documents could unwittingly alert management that you may be researching other options. Also, access to this information can be unexpectedly restricted at any time due to terminations or acquisitions, so you’ll want to have a record on hand if and when you need it. Make sure your photograph includes a recent date and your name, and DOES NOT include confidential client information, like names or account numbers.
  3. Detail how you’ve been running your business. Make note of the products and services you provide, areas of specialization, and anything else that will help other firms understand your practice. Putting time into this step will save time and energy when weighing whether you and a new potential firm are a good fit. If this seems daunting, talking with an experienced professional can help.
  4. Consider how your practice would ideally operate and service clients. Woman meeting financial adviser in officeIn other words, what will your business model be? Prior to talking with other firms, think aboutyour options for structuring your practice and research different firm types. Learn about other models, for example hybrid, RIA, tamp, dually registered, and fee only. 
  5. Working without a trusted consultant likely increases your chances of making a mistake. Avoid taking calls from recruiters who work for a particular firm, instead use an objective third party to consult and guide you through your options and negotiations. Doing so can potentially save you considerable time, energy, and frustration.
  6. Create a list of the key questions you want to ask each potential firm. Having a list at the ready will put you in the driver’s seat and enable you to zero in on the important, relevant information you need. Otherwise, you may find yourself at the receiving end – hearing all the things that a potential firm thinks you want to hear, rather than what you need to find out in order for you and your business to thrive. Not sure what to ask? Here are 150+ questions other financial advisors suggest asking.
  7. Organize your search. Many find it helpful to create a new email address, exclusively for the purpose of your search. Whether you create a dedicated email address or use an existing one, never send anything related to your firm search through your work email. You may also want to consider interviewing one firm at a time to stay more organized, ruling out firms that display any red flags. Be sure to research at least three firms to ensure you’re doing adequate due diligence not only for yourself, but also for your clients’ best interest. The best way to gain an accurate understanding of how much it will cost you and your clients to run your business with potential firms is to use a proforma. To use our proforma tool, simply reach out to schedule a meeting.
  8. Talk with advisors who recently joined the firm(s) you’re interviewing. If you’re strongly considering getting an offer from any of the firms you’re speaking with, ask to be connected with an advisor who has joined within the past year, or who has made the transition from the same firm you’re with right now. These individuals may be able to provide information on issues with specific products, account types, or other hurdles they have experienced since coming on board – all of which you would benefit from knowing about prior to making a decision. 
  9. Find an attorney that specializes in advisor transitions. While it may be tempting to work with your “friend who’s an attorney,” keep in mind that there are certain rules, regulations, and tactics advisors must follow when transitioning from current firms to new firms. For example, you will want to understand whether the broker protocol applies or not (With a little research, you can understand high-level details about protocol firms, but an attorney will be best-suited to dig deeper into this topic). Once you receive an offer to join a new firm, it’s important to have an attorney that specializes in advisor transitions review your contract, share insights on your offer, and provide input on your transition strategy (i.e., what information you can bring with you and what you can/should say after moving firms).
  10. Refresh your branding and marketing (if you’re going independent or joining a firm that allows advisors to have mBrand Building on the Mechanism of Metal Cogwheels.ore control over their marketing). This is often an exciting time for clients and the perfect opportunity to launch revitalized branding that shines a light on your team. Here’s ahelpful brand formation guide to get the creative juices flowing. 
  11. Travel to the corporate office for a VIP meeting/home office visit. Meet with key leaders and executives from across the company that you plan to join. Gain a solid understanding of how the company views the client/advisor relationship, how they plan to invest in supporting their advisors, and how they will ensure you have a successful transition. 
  12. Prepare to build a messaging and communications plan. When contemplating a transition, many advisors wonder, “what am I going to tell my clients?” We suggest starting with a communications strategy. This will give you confidence to know who you will share the news of your transition with and when, and ensure that a clear and consistent message is imparted at every touchpoint. Whether your communications strategy includes email templates, voicemail scripts, an announcement video, or presentations, it’s important that you and your team are prepared with a gameplan to communicate effectively with clients.

Transitioning from a current firm can be an exciting, and sometimes nerve wracking, time for financial advisors. With preparation and considerations to these best practices, you can help ensure the success of your business at each stage.

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