Advisor Corner: Transitioning client accounts

Transitioning client accounts is a big part of joining any new firm, particularly if you are starting your own registered investment advisor (RIA). But what do you really need to know to make the process as smooth as possible for you and as seamless as possible for clients? To help us learn more about what to expect from the account transition process, we spoke to Paul Surowiec, Director of Account Services at TD AMERITRADE Institutional.

Q: What are some important questions to ask custodians about moving assets and transitioning clients before making a move?

Surowiec: When you’re thinking about which custodian to use, it’s important to find out from them what services they offer, how they’ll work with you, are they focused on your needs, and how they can help you grow your business. It’s also important to ask them specific questions about the transfer process such as what will the timeline be? What are the paperwork requirements? What assets can or cannot be transferred? You need to be comfortable working closely with any custodian you choose and it’s important to make sure they have the services in place for a seamless transition.

Q: What is the custodian's role in helping to transition clients’ accounts? What types of services do you provide?

Surowiec: Custodians play three very important roles. First, they take away as much of the heavy lifting as possible from advisors so advisors can focus on their clients. Second, they help alleviate anxiety that advisors may feel about making the transition. Third, they create a customized transition plan based on a particular advisor's business and timeline for moving.

It’s really important to find a custodian that takes a hands-on approach. At TD AMERITRADE Institutional we have an Account Transfer Team* made up of dedicated specialists who are focused on transitioning an advisor’s business from one custodian to another.

We follow a dependable five-step process to help ensure a successful transition from one custodian to another. First, one of our dedicated Account Transfer Team Project Planners meets with the advisor to analyze his or her individual situation. The Project Planner acts as a direct point of contact during the entire transition. Next, we create a customized transfer plan for an advisor’s business identifying timelines, milestones and any unique circumstances for a particular end-client situation. Next, we gather and organize account information for the advisor and assist with document preparation. This includes completing all necessary paperwork and collecting contra-firm account statements, client information, and pre-populating forms. We also conduct a quality assurance review of all forms and deliver the documents (organized by client) to the advisor. After the documents have been received back, we initiate and monitor the efficient transfer of assets and provide status updates. Finally, TD AMERITRADE Institutional completes the transition and follows-up to ensure every last penny is received.

In addition, we provide on-site support whenever it is needed.

Q: How long should advisors expect it to take, on average, to transfer client accounts? What factors could make it take longer than average?

Surowiec: The length of the transition depends on the advisor's individual circumstances. The advisor must meet with each client to explain the move and to get his or her clients to sign the new account application and transfer form. We have seen instances of motivated advisors having their business transitioned from one custodian to another in as little as three weeks. Others may take their time for various reasons and can take up to three to four months.

Once TD AMERITRADE Institutional receives the documents, the process happens quickly. A typical one thousand- account bulk transfer will take seven to 10 business days to open accounts and transfer the assets. If the assets are being transferred from a firm that is part of the ACAT (Automatic Customer Account Transfer) system it typically takes seven business days to transfer the assets. Assets being transferred from a Non-ACAT firm (typically banks and trust companies) can take a little longer. Also clients that hold limited partnerships will find that these types of transfers may require more time because the general partner needs to have the position re-registered.

Q: What are some things to think about as well as avoid when transitioning client accounts?

Surowiec: There are always little things that crop up when transitioning client accounts. That’s why it’s so important to work with a custodian who is dedicated to minimizing potential blips. Even so, it’s important for advisors to stay on top of things as well. For example, check when your client's established periodic payments are scheduled. Some firms will freeze the accounts, including periodic payments, as soon as they receive outgoing transfer instructions. Work with your new custodian to make sure the transfer is timed properly so that there is no interruption in the payment. Generally, a good practice is to avoid bulk transfer over assets right around quarter-end. Most advisors tend to be busier during this time, preparing client reports and doing their billing. You want to transfer assets when you have the most time to be attentive to details.

Q: What documents and paperwork do advisors need to prepare in order to move their clients' assets?

Surowiec: The basic paperwork requirements are a new account application and a transfer form. But there may be additional forms based on the type of account features your client has. For example, some clients may have certain account features as well, such as check writing, proxy authorization, or periodic payments. Each of these has a separate form that would be signed by the advisor's client. This is another reason why it’s important to work with a hands-on custodian. You want to make sure you don’t leave any assets behind or cause clients unnecessary delays in terms of the services they are accustomed to. A good custodian will make sure that all I’s are dotted and T’s are crossed.

*Firm Qualifications Apply.

Paul Surowiec is Director of Account Services at TD AMERITRADE Institutional.

TD AMERITRADE Institutional, Division of TD AMERITRADE, Inc., member FINRA/SIPC/NFA.

Questions or feedback? Please email us at nextmove@penton.com.