 So you’ve decided to switch firms. Obviously you’re hoping all your clients will share your enthusiasm and come on board, but one of the most costly mistakes you can make is to sit back and do nothing, assuming that loyal clients will automatically remain that way. Indeed, keeping your book as intact as possible requires a lot of advance planning. It’s a matter of being as proactive as you can without violating the tenets of your contract or any applicable laws and regulations. Here are a few practical steps to help you maintain your client base as you began your journey with your new firm. Allay clients’ fears.
Change is scary to many people, and you want to do everything you can to take fear out of the equation. For example, when Bill Hayes left Wachovia Securities in 2007, he called clients and visited their homes to explain why he left, the benefits for him, and also the advantages for them. Hayes also suggests advisors assure clients that they’ll continue to monitor their portfolios and meet their needs at the new firm “Ultimately it’s not about you. It’s about them and their money,” said Hayes, director of asset management at Chicago Investment Group, a brokerage and RIA firm. Make the transition as smooth as possible.
There’s a lot to be done when you switch firms, but make sure you leave time to hand hold. It is critical for advisors to explore all the avenues, prepare all the documentation, and understand and explain exactly what clients will experience as they move their assets to the new firm, said John Coyne, president of Brinker Capital, an investment management firm in Berwyn, Pa. “It is so important that this initial move be seamless to the end investor,” he said. Make sure, for example, you are aware and make your clients aware of which assets are portable and which may not be. Also, don’t let clients find out the hard way that perks such as a Gold Card or a higher-than-average interest rate will no longer be available. You need to plan ahead and, in some cases, perhaps you can work something out with your new firm to appease your clients. Also make sure you’re managing your clients’ expectations, letting them know it can take several weeks for their accounts to fully transfer. “Advisors have to get involved in the nitty gritty of the transition process because they will be held accountable by the end investor,” Coyne said. Follow a plan.
Every advisor needs to develop a transition project plan, said Damian Peter, president of United Advisors LLC, a wealth management firm in Secaucus, N.J. His firm, for example, has mapped out over 100 steps that need to take place during the transition in order for it to be executed smoothly. One of those steps involves segmenting clients. There are, of course, many rules with respect to what client information you can take when you leave a firm and how you can use it at the new firm. A good lawyer can help you sort out what’s appropriate for your individual situation. But assuming you are able to take basic client information—name, address, e-mail, and phone number—Peter recommends putting all this information into a spreadsheet and carving up the data in various ways. For example, he suggests advisors establish a referral association tree, which allows you to figure out pockets of clients that at some level know each other. You know you can’t reach everyone at once, so this type of grouping allows you to determine which clients have been with you the longest. It also avoids the embarrassment factor of the father—whose money you’ve managed for years—finding out from his son who just started using you that you’ve switched firms. Another way to segment clients is by revenue. Clearly, the bigger relationships should be priority. Advisors should also look at location. Knowing that 10 of your clients reside within a few miles of each other can help you set your time table for visiting them and help determine your budget for travel. It’s also important to know which clients you’ll need to visit in person to sign paperwork and which ones will be willing to do it through the mail, Peter said. Communicate often.
Since change is so scary and there’s so much going on during the transition, it’s critical for you or your staff to contact clients on a frequent basis to keep them abreast of what’s happening. Has the paperwork been processed by the old firm? Are the accounts in transition? Has the move been completed? These are all questions clients want to know, and making them feel you are on top of things can go a long way in assuaging their concerns. Many times when clients have to make new decisions they question it soon after. “If you are frequently contacting your clients, it should eliminate what we define as buyer’s remorse,” said Peter of United Advisors. Also be consistent. Peter suggests advisors create a laminated list of talking points to be kept next to the telephone so that any team member, using the prepared information, can discuss the move with clients. “You want to deliver a consistent transition message to your clients,” he said. Demonstrate Integrity.
Recognize that despite your efforts all your clients might not want to join the new firm. There are a host of reasons that could happen, and it might not be anything personal. So don’t take it as such, and as a measure of goodwill give a client who doesn’t intend to move the name of someone at your old firm. “Try never to leave on a bad note,” said Hayes of Chicago Investment Group.  
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