There’s a saying that can’t ring truer: Word travels fast.
Whether or not you are actively thinking of making a move, advisors must remain vigilant in protecting their confidentiality around any due diligence they perform. This extends to the casual consideration they give to a possible move. Even impromptu conversations and idle comments can be damaging, create unnecessary exposure, and invite unwelcome scrutiny by your firm.
Take the example of an actual advisor we will call “Bob” (to ensure his confidentiality).
Bob, who was a few weeks away from making a move, confided in a colleague and shared his plans in a social setting. Intended as a friendly and presumably confidential conversation (we are not making any accusations), the news ended up reaching their manager.
The outcome was regrettable yet entirely avoidable, leading Bob to accelerate his move.
This single indiscretion complicated both his departure from the prior firm and his joining the new one. And that’s to say nothing of the additional stress he created for himself by having to accelerate his move by even a few weeks.
Fortunately, these incidents are few and far between, but they still serve as a reminder that discretion is key. The reality is that each stage of education and decision-making requires placing trust in the process itself, and potential pitfalls are avoidable if you are aware of them and remain deliberate in your conversations. Here are seven principles that should drive your actions:
1. Be selective and keep those in the know to a minimum. Your “inner circle” should be tight and limited to only those on a need-to-know basis. That means limit sharing thoughts or intentions with extended family and friends. (Rules prohibiting the solicitation of clients pre-move must be considered as well.) Ultimately, the advisor must balance the need for confidentiality against the value of including key members in the decision-making process. It’s about making thoughtful, deliberate choices.
2. Avoid “water cooler” chatter with colleagues. Listen more, talk less, and don’t get involved in office gossip—the latter of which could trickle down to you.
3. Limit or avoid informing staff and junior members of the team of your intentions or plans until absolutely necessary and advised by the new firm or legal counsel. It’s not a matter of trust—it’s about limiting the burden of safeguarding the “secret.”
4. Preserve the status quo. Don’t do anything unusual or out of character both in terms of your behavior with your firm, as well as in client interactions. Be mindful to avoid printing documents that might fall outside of the ordinary course of doing business and use your work email address strictly for work correspondence. Use extra caution when emailing team members who are in-the-know to ensure separation of work from move correspondence.
5. Be prepared with the right response. Managers are known to go on fishing expeditions from time-to-time when they are feeling particularly vulnerable, such as when they experience attrition or otherwise see movement in the market. If a manager, colleague, or client asks, “Are you planning to leave?” have your reply ready and one that your intended new firm is comfortable with.
6. Do not discuss or infer anything about change with your clients. Clients can’t be informed or consulted unless allowed by the terms of any existing employment agreements.
7. And, most importantly: Get and follow expert advice, being selective about from whom you seek counsel, input, and education. Understand your obligations under any employment agreements, such as non-solicitations, non-competes, and garden leaves, and how they may impact a move. Consider having agreements reviewed by a securities attorney.
Almost 10,000 experienced advisors moved in 2023, and these moves, including by many of the industry’s highest-profile teams, were not deterred by the possibility of their plans getting leaked. Most breaches, when they do occur, can be traced to the advisor’s own behavior and are completely avoidable.
A successful move is about being vigilant and consistent in the choices made along the way. It is entirely legitimate, even vital to an advisor’s fiduciary duty to clients, for an advisor to explore their options and evaluate a future move. Yet sometimes advisors feel guilty keeping valued relationships in the dark about a decision that is so significant both professionally and personally. Trust that they will understand the necessity to safeguard the decision until after the move.
Only with some periodic due diligence can you ensure that where you choose to serve clients remains the best place. But that choice must be exercised with care—balanced against an advisor’s duty to their current firm which requires maintaining behavior that is loyal to the firm while they are still employed there. There is no need for paranoia; just let good sense, combined with a dose of caution, guide you.
Barbara Herman is a senior vice president of Diamond Consultants. Joshua Tomolak is a senior consultant at Diamond Consultants.