How to Look When It's Time to Leap

Switching firms is a huge decision so do your due diligence well. Consider these two scenarios:

1. The Shortcut

   Jerry was very frustrated with his firm because he felt that he was receiving far less support from management than he wanted. Meanwhile, he was being wooed by another wirehouse. Worried the other firm's big offer would be pulled soon, Jerry was eager to make a move and replace much of the wealth he lost during the market downturn. But he didn't ask a lot of questions, relying instead on casual conversations with the firm's branch manager. As a result, he never pinned down important specifics, such as what products he could sell, how his commissions would be handled and the firm's policy on sales assistants. A few months after taking the leap, Jerry started to become disenchanted. Struggling to keep up with the transition of his clients and concerned about growing his business without proper support, Jerry was angry with himself for not asking enough hard questions before he made the leap.

2. The Scenic Route

   Edward and Jim, a wirehouse team with nearly $1 billion in assets under management, were in no rush to leave their firm, but were interested in exploring opportunities at other wirehouses. Once they narrowed down their short list to one firm, their due diligence began. With many moving parts to Edward and Jim's business, they had an extensive list of questions. that needed to be answered. After a number of meetings with the firm's local branch, Edward and Jim went to the firm's headquarters, where they met with relevant product heads and senior leadership. It was a long process, but all their priorities were addressed, down to the tax implications and treatment of imputed interest on their transition bonus. Satisfied with the results of their research and confident the move was in their clients' best interest, Edward and Jim made the switch. A few weeks in, they moved 90 percent of their best clients.

Key People, Key Questions

When contemplating your move to a new firm, the best practice is to engage in several comprehensive office visits. The opportunity to see how a firm works up close and to get the answers you need directly from the source can be invaluable. Plus, when you conduct this due diligence in a time of relative calm, before you feel intense pressure to move, you are more likely to think clearly and make the best decision.

To ensure that your wirehouse visits and evaluations leave nothing to chance, map out exactly who you want to meet, including the firm's managers, representatives of different specialty areas (such as product and technology), and ideally, other advisors who recently moved to the firm. Most importantly, to avoid being distracted by the firm's red carpet treatment, prepare a checklist of important questions for each person ahead of time.

Here are three sets of key questions:

1. Key questions to ask managers:
   • Have you had a lot of turnover in this branch?
   • How will you and this firm help me to achieve my goals?
   • What makes your program unique?
   • What are your plans for the future?
   • What is the culture like here? What is your management style?
   • Will I receive any formal training? Who will manage my transition?
   • How has the last financial advisor you hired done?
2. Key questions to ask a product or technology representative:
   • What should I know about your current technology and what are your plans for investing in it in the future?
   • How accessible are you?
   • If there's a new product I'm interested in, what is the procedure for adding it to our list of allowable inventory?
3. Key questions to ask a recently hired financial advisor (with a similar background):
   • What attracted you to this firm?
   • How did your transition go? What type of support did you receive?
   • What is the overall value to you and your clients in having made this change?
   • How has your business grown since you joined the firm?
   • In hindsight, is there anything you would have done differently or asked for?

All wirehouses are not created equal. Ensuring you choose the right one is up to you.

Mindy Diamond is president of Diamond Consultants of Chester, N.J., a nationally recognized boutique search and consulting firm in the financial services industry.