Ask Your New Firm These Questions Before Making The Switch

Great Transition Support Requires Access To Honest And Knowledgeable Senior Leaders
Paige Swartzendruber, Chief Business Development Officer, Berthel Fisher Companies
Paige Swartzendruber, Chief Business Development Officer, Berthel Fisher Companies

There are many reasons why advisors dissatisfied with their current firm don’t move to a new one, but trying to avoid a painful transition process is likely near the top. This is especially true for advisors running smaller firms who cannot afford much, if any, client attrition.

Given the stakes, advisors like that can be understandably trigger-shy about making such a dramatic move. So, unless their current situation becomes unbearable, they tend to stay put, willing to tolerate a less-than-ideal situation rather than deal with the unknown.

The truth, of course, is that almost every firm claims to have excellent transition support. Good luck to the RIA, independent broker-dealer or advisory partnership network that tries to recruit talent by saying anything other than that. The tricky part is figuring out who’s telling the truth.

Almost every firm claims to have excellent transition support.

For instance, it’s common for firms to tout their transition-support credentials by saying, “We provide access to senior leaders.” That’s great, but mere access isn’t enough. Indeed, what those senior leaders know about the process and how honest they are about it is far more important.

Therefore, transitioning advisors need to ask potential destination firm senior leaders about their step-by-step process, the software that helps to facilitate it and the policies that protect all the parties involved. Then, after all that, be sure to demand references from other advisors.

Here’s an overview:

The Complete, Step-By-Step Transition Process

Begin by asking senior leadership to explain their transition approach, including how long it takes and how easy it is. Exact timelines will, of course, vary. However, any firm should be able to provide useful insight into its processes without relying on platitudes or corporate jargon.

If the timeline seems too long or you think the support in some areas could be lacking, ask for an explanation. From there, propose a chronology and/or backing that makes sense for you and your business.

Then, ask what client-facing collateral that outlines their resources. These could include, emails and brochures about the history and mission of the new firm, investment and asset protection strategies, multigenerational financial planning and so on.

And, finally, ask how clients can contact the firm directly for answers about the transition. If possible, do test runs by calling that phone number, sending that email and filling out that online form yourself.

Software The Firm Uses To Facilitate Practice Transitions

Poorly set up transition software can result in reputational damage, client attrition and regulatory penalties. Ask senior leaders about which platforms the firm uses; how automated and user-friendly the features are, and how the advisors are trained on these platforms, by whom, and when.

Different brands often have distinct dashboards, capabilities and integrations. Some advisors find specific platforms more intuitive than others. Some firms may lack the software licensing tier packages you need.

And if the would-be firm’s platforms require more manual entry than the ones you are accustomed to, seriously consider how that will impact your business. Every minute you spend overcoming tech-related shortcomings is time you could be spending with clients or doing business development.

Advisors don’t like discussing enforcement issues, yet having those conversations early on can save you headaches down the line. Ask the firm’s leaders how many practices have had regulatory or legal problems due to a transition. Smaller and younger firms should have relatively few transition problems.

Make sure to read the firm’s compliance policies regarding the transition process. They should be clear and concise but comprehensive. Also, find out what happens when an advisor requires creative compliance solutions, meaning specific cases that apply to your practice. Do not accept blank stares or vague answers. If necessary, ask to pose the same question to a compliance officer specializing in your practice’s needs.

Don’t Forget Those References

The final step is to obtain advisor references who will confirm the above information. It’s too risky to trust without verifying from others in the advisor’s situation, so ask those advisors about their experiences and look for any discrepancies between what your peers say and the firm’s initial assurances.

Notably, don’t be shy about following up with senior leadership on anything that does not match. It is the firm’s job to make you feel comfortable and confident, not the other way around.

This approach should clarify advisors’ most pertinent questions about a firm’s transition support process. If you don’t have an open line of communication with leaders about these points, they seem disconnected when responding, or their answers don’t add up, that can be a huge red flag. But if everything seems in order, you may take comfort in knowing that you’ve found the right wealth management firm for your practice.

Paige Swartzendruber is Chief Business Development Officer for Berthel Fisher Companies

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