If you’ve spent any time on social media or flipped through advisor news articles in recent weeks, you’ve likely seen headlines and posts pointing to a study by Cerulli Associates that found approximately one-fifth (19%) of client assets are lost when advisors transition to a new firm.
Based on the advisors surveyed, lost revenue during the transition period (71%), learning new technology systems (75%), and operational matters (77%), are the top challenges that often get in the way of this process.
This data is valid and well-researched. But, as someone who has helped more than 500 advisors find better homes for their books of business, I’m here to tell you that you should look past it.
Personally, in my 21 years as an advisor recruiter, I’ve not once seen an advisor lose 19% of client assets during a transition. Of course, this is not a slight on the data itself—it’s an important distinction to be made that advisors who lose substantial client assets during a transition are likely either moving to the wrong firm, or making a drastic change where losing client assets is expected.
According to Grier Rubeling, founder of Advisor Transition Services, “Switching firms should lead to some client attrition. If you’re leaving a firm with the goal of having an efficient practice, then a transition is the perfect time to part ways with clients who don't fit your new model.”
I believe that your ability to maintain client assets through a transition is fully dependent on how thorough the due diligence process is to ensure you’re joining the right firm. When you find a firm that is positioned to help you grow, is values-aligned, and will improve your client’s overall experience, the assets will follow through.
Alignment Leads To Retention And Growth
As Grier says, making a transition is a great time to get really clear on who your ideal clients are and what qualities to look for in a potential firm. To start, I recommend asking the following questions:
- How embedded are your clients’ assets with your current firm?
- On a personal level, are your clients more loyal to you, or to your firm?
- What value do you bring to your clients that is independent from your current firm?
- What are some of the immediate needs your clients have that you are unable to meet?
- What are some of the needs that you anticipate your clients will have that you would be unable to meet if you stayed?
Once you recognize where your strengths are, you can use those strengths to set the base criteria for a potential new firm—this ensures a lateral move, and limits the risk of clients jumping ship. Grier adds, “Focus on a unique value proposition and company culture. Recruiting and retention are easier when you have advocates.”
Plan For Tomorrow, Not Today
As a consumer, think about how quickly your expectations and needs have evolved in recent years. We’re expecting instant gratification via technology, faster customer service, and access to financial tools that weren’t even available five years ago.
Your clients are no different. As an advisor looking to make a move, you need to think about what the client may want from you in five or ten years, that perhaps they’re not asking for today. Then find a firm that is willing to evolve to meet those needs—this is key for client retention.