To discuss the benefits of transition counseling, The Next Move recently talked with Jeff Zabel, director in charge of the advisor-in-transition sales efforts at TD AMERITRADE Institutional. Here’s what he had to say.
Q: What type of transition support and advice is most important in helping an advisor make the move to be truly independent?
A: There are a couple main things: having a detailed plan and a process in place and also having a dedicated transition consultant every step of the way. On the planning side, we at TD AMERITRADE Institutional have a great tool called the Business Evaluator that can walk you through the process. It is an interactive tool that allows us to work with advisors every step of the way, from the exploring phase to the due diligence phase, to the actual transition. It also allows reps to understand all the economic considerations and how independence may financially benefit them.
The other important factor is having a dedicated transition consultant work with you throughout the process. Advisors need to continue to run their business every day. They need to be involved in the process of going independent, but the transition consultant can help lessen the load. The consultant can handle certain aspects related to technology, provide access to third-party legal counsel and offer advice on structure and operational issues. TD AMERITRADE Institutional transition consultants have worked with hundreds of advisors and are able to share best practices based on their specialized experience. We think it is a huge benefit in going through the process.
Q: What else do reps need to do to make sure their transition to independence goes smoothly?
A: In addition to having a well-defined plan and working with a transition consultant, it’s very important to work with an attorney or compliance consultant who has experience in transitioning advisors to independence. You want to have counsel to assist you in managing your transition from an employee at a broker/dealer to business owner/independent advisor. Other possible areas you’ll need to think about include financial planning technology, marketing, public relations assistance and investment management tools. We at TD AMERITRADE Institutional can help you find the right solutions to suit your needs. We also have a mentor council of independent advisors consisting of former wirehouse brokers and reps from other brokerage firms to help advisors through any issues that may come up. Speaking with someone who has already gone through the process can really help to make an advisor feel more comfortable.
Q: What are some of the major stumbling blocks reps face as they prepare to go independent?
A: Forming a plan is one thing, sticking to it is another. Advisors can get distracted—it’s a busy world we live in—but following the steps in the plan is crucial to a smooth transition. It’s also important for reps to be realistic about the clients that may come with them. I think it’s better to be a little more conservative rather than expecting every client to come over. Also, as you explore the transition, be careful whom you share your plans with. You don’t want to do anything that could jeopardize your move.
Q: Would you talk about a few easily overlooked items that tend to fall under the radar without proper transition counseling?
A: When you’re coming from a wirehouse or regional brokerage, you may overlook some technology, operational, communication and client-servicing issues that you took for granted before you were on your own. As an employee of a firm, a rep may never have had to handle many of these items.
Generally, advisors don’t think about client servicing and possible segmentation of their clients. They should consider spending more time with the clients who are more profitable. Advisors start with 100 clients and think they’re going to serve them all the same way. Although every client is important, from a business perspective, you may want to spend more time on your best clients, those that generate the most revenue.
Q: How does good transition counseling help reps overcome the big and the little impediments to going independent?
Most advisors/brokers have never gone through this type of transition before—it’s unchartered waters for them. They’re not completely sure what to expect, and working with someone who has the necessary tools and a lot of experience in helping advisors through the transition can be extremely valuable and reassuring. The right tools and experienced transition consultants are the GPS system for advisors looking to go independent.
Jeff Zabel is the Director of Regional Sales at TD AMERITRADE Institutional. TD AMERITRADE, Inc., member FINRA/SIPC.
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