When young people first set their sights on a career of financial advice, they often don’t know what type of firm they want to work in. They aren’t sure what suits their interests and talents best. So what do they do? They dive into the first reasonable option to launch their careers.

They gain some experience. They develop client-facing relationships. They start climbing the internal ladder of success. And all the while, they wonder if the firm they joined was the right fit all along.

At some point, they decide maybe it wasn’t, or that it’s time to make a change. It’s easier said than done. The thought of transition often paralyzes people. In fact, it’s so frightening, many advisors decide not to make a change at all—even if it’s the right move for them and their clients.

Is it the fear of the unknown? Do they not understand the available options? Are they going to run into legal problems if they try to leave?

The answer is yes—it’s all these things and more. Those fears make it difficult for them to advise themselves—to examine their own goals, even if they find it easy to do that for clients. Nor are they sure how to use the current and potential financial resources at their disposal to change their situations.

As physicians, they are unable to heal themselves.

Ken’s Story

A fellow professional of mine, Ken, once went through this experience. He had graduated from college with a finance degree and immediately began his career with a firm looking to launch and grow its wealth management presence in the Southwest. This firm already had an established high-net-worth client base and an incredibly strong reputation.

For seven years—using tenacity and determination—Ken built a book of business that included 210 clients with $310 million of assets under management.

But then his firm did an about-face and chose to alter its wealth management market strategy. It eliminated all the field offices that had given it such a ubiquitous presence, and thus lost a lot of face-to-face contact with clients. The firm decided to focus on phone centers with moderate to minimal human intervention instead. Even worse, the firm didn’t telegraph any of these changes to its employees.

Ken was offered a choice: He could either move his family to the company’s headquarters in another time zone and work in a call center, or he could take severance. He had two weeks to decide.

For both professional and personal reasons, he opted for the severance package. It required him to sign a one-year non-compete and non-solicitation agreement.

Culture And Personal Growth

One day, you might be forced to make a decision like Ken’s. Or you may simply wake up and realize that what you’re doing no longer suits you. Your feelings could stem from personal, moral or ethical changes within yourself or they could be prompted by external industry pressures. Regardless, you know that the time has come to make a change. And coming to terms with that is just the tip of the iceberg.

Your move very likely might not be prompted by money at all. Here are some of the major reasons you might switch firms:

• You have developed cultural differences with the firm. An organization’s culture comes from the life experiences each employee brings with him or her. (It’s especially influenced, of course, by the experiences of its founder and other senior executives.) But every person grows, and motivations can shift over time.

• You have developed a growing authority in a subject area that may not be aligned with the company’s direction. That means your personal growth trajectory likely lies outside the company.

• You have determined that the needs of your clients are not being served by the platform or model you’re currently working with.

• As the advisory landscape constantly changes, you have come to realize that other companies are better suited to sustaining and servicing your clients.

• You have discovered an entrepreneurial spirit within yourself, and with that growing confidence, you have decided to go out and start your own practice (or possibly merge with like-minded people).

• You might have begun to focus on your family more, and you simply cannot continue to work the same hours you always have.

Finding The Right Firm And Making The Transition

After you have looked at the pros and cons of changing firms and made your decision to leave, it’s time to do homework. You will have to be realistic about the kind of firm you want to join and the expectations your new colleagues would have.

People leaving their firms face the same complications and emotions people do when leaving bad marriages: anticipation, separation anxiety and potential financial hardship, not to mention the contractual obligations.

Ken’s predicament was compounded not only by legal restraints but also by an inefficient market. He understood he no longer fit at his firm, but he didn’t know where to go. Unfortunately, there is no Match.com for advisors.

To overcome fear and anxiety in such a situation, you must gather knowledge and stay focused on the positive. Transitions can be extremely successful if you take a few operational issues into account as you plan your departure:

• You should educate yourself on all the legal requirements. Understand all your restrictive covenants.

• You must respect and honor your current employment and obligations. And you should do what’s best for your existing clients.

• You should talk to others who have made similar moves. What worked for them and what didn’t? What can you learn from their experiences? Recognize that the transition will need your focus for a year.

• You will have to slowly disentangle any financial ties with your current employer. If you have retirement accounts or other employment benefits, you must have alternative solutions lined up (for example, new mobile phone contracts, bank accounts, travel discounts, subscriptions to research, etc.).

• You must be aware of the impact the change will have on your clients. It might be disruptive and upsetting to them, and there will be surprises. People you have deep relationships with may not follow you, while others you weren’t particularly close to cannot wait for the new ink to dry. It’s not personal. It’s just what they believe is right for them now.

As soon as Ken decided he was going to leave his firm, he began his due diligence, researching where he could continue his career on a platform that would allow him to operate with integrity and fulfill his charge as a CFP. He spoke with broker-dealers (both regional and national), four or five different medium-sized registered investment advisory firms with sound reputations, and several regional and national banks.

His final selection was a firm that offered a culture he desired, a strong fiduciary acumen, independence (with an employee ownership structure) and a good location for his family. He understood he would have to wait a year before attempting to contact clients from his former firm, but he succeeded in aligning himself with a company that believed in his capabilities and sustained him financially until that year went by.

Not every advisor has such a good experience, unfortunately. In fact, many advisors who decide to leave face legal, emotional and financial devastation.

Our Legal Conundrum And Putting The Client’s Interest First

We have all seen the headlines about wirehouse firms leaving the protocol for broker recruiting, which protected firms by establishing a standard for how much client information an advisor could take when changing jobs. The protocol was intended to help all the companies avoid the expensive litigation that results when they fight with advisors who leave and take clients with them (litigation that causes hemorrhaging on corporate balance sheets). If an advisor followed proper governance rules, he or she was free to take a list of client names, e-mail addresses, phone numbers and account names, and actively solicit those clients without the fear of a temporary restraining order.

Apparently, once the protocol proved to be less accretive for some firms, it was abandoned. And as they relinquish themselves from these agreements, we enter a world in which the guardrails that kept us from litigation and chaos will be gone.

It’s understandable that employers who sign hefty paychecks to advisors or share with them a hefty percentage of revenue want to protect themselves. They are the ones who have fronted the salaries and sacrificed time and energy to grow their talent pool. But on the other hand, there must be a less draconian solution to advisor attrition—if only for the sake of the clients. In the legal world, law firms acknowledge that it’s often a net benefit to the client if he or she can be wooed away by a lawyer to a new firm. The same goes for finance: The inability to transfer client information between firms is a profound net loss to those clients. We should allow such information transfers for the same reason we allow patients’ medical records to be transferred from one physician to another. Advisory clients must be confident that their personal financial information can follow an advisor to his or her new place of business.

Using Caution

It is becoming increasingly apparent that advisors need to define their goals and plan for their futures with caution, because one thing is certain: The financial planning industry is in a state of flux that is not likely to settle anytime soon. It’s becoming increasingly less transactional. Advisors are learning to listen more and to adapt more readily to their clients’ specific needs. It’s now easier to compare doctors and lawyers to financial services when referring to these changes.

Suffice to say, if advisors do right by their clients and stay true to the regulatory environment by which they are governed, they will continue to be invaluable stewards. It is incumbent upon each of us to broadcast that opportunity to those searching for a rewarding career of service.            

Catherine M. Seeber is a vice president and financial advisor at CAPTRUST in Doylestown, Pa. She is a speaker at the 4th Annual Invest In Women conference, being held April 29-May 2 in Houston.