Truth be told, no advisor purposefully sets out on a path of missteps when making a move; in fact, most aren’t even aware of what can actually go wrong. There are some common pitfalls that can add layers of difficulty or even derail a move altogether. Being aware of them can alleviate much of the stress while paving the way for a far smoother transition process.
Here are the six most common mistakes advisors make.
1. Not knowing what you really want
Many advisors leap into exploration mode without first giving serious thought to what they’re looking for. So, before you even start, you’ll need to dig deep and ask yourself:
What frustrates me about my current firm? And what would I like to replicate?
What do I hope to accomplish by changing firms?
How will this move benefit my clients? What can the new firm provide for my clients that my current one cannot?
Will a new firm offer opportunities to grow, opportunities that perhaps are lacking where I am now?
2. Not doing your due diligence
Due diligence is arguably the most critical step in the exploration process. Will changing firms be enough, or is it time to consider a different model? Take the time to get educated and understand all the possibilities, whether independence, a regional firm, another wirehouse or any of the options in between.
3. Being blinded by the big check
While recruiting deals can be outsized and pretty tempting, making a move solely for the upfront check is a mistake. The reality is that transition money is only one facet of a move. Your primary focus should be alleviating frustrations and finding an opportunity that allows you to grow your business more efficiently and better serve your clients. And, because there are so many options in the independent space which are much less about short-term upside and more about long-term value creation, it’s especially important to be certain that the firm offering the most money is also the best place for you and your clients.
4. Running away from your frustrations, not towards your goals
The most successful moves happen when the advisor moves toward something better, feeling the pull of another firm or model. Simply wanting to leave your current firm isn’t enough of a reason to subject your business and clients to the upheaval of a move. You must be able to articulate to your clients why you chose to move. Make sure you’re moving to something better for both sides of the table.
5. Not checking in with your partners
Far too often, we find that advisors don’t communicate enough with their team members, assuming they’re all in agreement as to priorities, frustrations, how entrepreneurial-minded they are, and their projected timeline. But that’s not always the case. As in any relationship, being honest about current concerns and future goals is critical. By regularly “checking in” with your partners, you can avoid surprises about the direction you want to take the business in.
6. Not having a Plan B
Even advisors who are content and growing should remain educated on the available options. Both the landscape and the regulatory environment are rapidly changing, so it’s important to stay current. The best time to do your due diligence is before you have a reason to move.
Keep in mind that exploring your options is not disloyal to your current firm. In fact, you may discover that you’re indeed in the right place for your business and your clients.
But if you’re considering a move, learn from others who’ve gone before you. Knowing where they went wrong and avoiding those same pitfalls will help ensure that you’re covering all your bases and doing what you can to help things go smoothly along the way.
Mindy Diamond is President and CEO of Diamond Consultants in Morristown, N.J., a nationally recognized boutique search and consulting firm in the financial services industry.
