Extra Help Isn't Necessarily Helpful
An advisor named Ralph agreed to transition his business to another one named Eric. Ralph, however, had one demand: Eric had to employ Ralph's right-hand staff person for at least a year. This arrangement worked well-for the first three months, anyway-since Ralph's clients were used to working with this staffer, and that helped them get used to working with Eric.
When they had reached a state of stability, however, Eric realized that he was now overstaffed, having brought his own highly efficient employees along. He wasn't sure by that point how to use the inherited staff member productively. Eric struggled to find worthwhile projects to take advantage of this additional manpower, since he wanted to honor the agreement, but finding meaningful work for the extra employee was a management challenge he had never anticipated.
Lesson learned: Before signing an agreement, carefully think about which staff members are critical to keeping clients and how each employee will contribute to the firm's success.
Details Make The Difference
Of course, it isn't just big issues like these that can make or break a transition. Even the smallest (and seemingly most insignificant) details can have a major impact on the client experience. Imagine listening in on clients' conversations as they leave the new advisor's office after the first meeting. What might you hear?
"Ugh, we have to start a relationship with a new advisor all over again."
"Bob only wants to see us twice a year. Bill always saw us quarterly."
"Keith uses a wide screen to show us our financial performance. We sure aren't used to that!"
"I was surprised when the new advisor had an agenda for our meeting."
"I hate our new advisor's telephone system-'Push 1 for ... . ' I like having a human answer the phone."
"Didn't Chuck always say he didn't like those products? The new advisor seems to recommend them."
"I'm glad we can get our insurance needs as well as our investment needs addressed under one roof now."
Think about the transition from the client's perspective, and make it your goal to ensure that any shifts in the practice spark positive conversation. Here are a few tips to keep clients happy:
Make it easy for clients to build a relationship with the new advisor.
Make sure the new advisor meets just as frequently as you did with clients, at least initially.
Be clear about the new advisor's callback procedures, making sure they work for clients.
Be sure that clients are comfortable with the clarity and format of the information they hear during the first meetings.
Proactively address any differences in the depth and breadth of the new advisor's services, especially the different opinions you and the new advisor might have about certain issues or products.
In addition to client relationship issues, don't forget the nitty-gritty business details that accompany a transition:
Ensure that both you and the new advisor have the same licenses and insurance assignments in the same states before the transition occurs.
Monitor your technology carefully to ensure that all your accounts are transferred.
Keep tabs on the new advisor's compensation after the transition to ensure accuracy.
The Best Best Practice: Think Positive
See yourself moving toward something new rather than leaving something behind. Every transition has its challenges. But thinking positive is one best practice that defines every successful succession story.
Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network, Member FINRA/SIPC, a registered investment adviser, in Waltham, Massachusetts. She can be reached at [email protected].