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Financial Advisors: Prepare for a Successful Transition



Written by: Robert Bartenstein | Washington Wealth Management

In the great 80’s movie “Trading Places” Dan Akroyd’s character Louis admonishes his miserly uncle who scoffs at the size of the payroll checks to be signed, “Can’t get around the old minimum wage, Mortimer.” The same could be said of your transition from a wirehouse to independence. There’s simply no “easy way” to get it done. Anyone who tells you otherwise is a charlatan or has never performed the delicate operation themselves. When it comes to making the move to independence the degree of difficulty you’ll experience, whether more or less, is purely relative. With that said the lifetime of rewards that await more than justify the effort.

Finding the right partner will solve much of the “how” and “where,” the mechanics if you will. What advisors must do for themselves is prepare. Prepare your mental attitude, prepare with training, and prepare with planning. With these bulwarks in place, anyone can make the move to independence efficiently and effectively. Here’s what I mean:

  1. Prepare with Mental Toughness: When you imagine independence; with your name on the door of a great office, your own brand, your website and legions of adoring clients who’ll follow you to the end of the earth, you’re right. What your big box firm imagines is you machine gunned at a toll booth like Sonny Corleone, your bullet riddled body slowly rolling to a stop in the street while the henchmen drive away with your livelihood.

    Make no mistake, there’s going to be a gunfight, so you need to be mentally tough, evangelical even, about your cause. Get your mind right. Before the shooting starts you have to know with certainty why you’re doing what you’re doing, for whom and over what time period it will be done. It will feel a lot worse than it is. Statistically the odds are very much in your favor. A recent Fidelity/Cogent study revealed that 86% of breakaway advisors said they took all or most of their clients when they made the move to independence. Our experience echoes that number. Buckle your chin strap and welcome the battle, you’re going to win.

  2. Prepare with Training: Being mentally tough is a form of preparation but it alone won’t get the job done. You need to know how things work at your future destination. A strong transition partner will set you up with an in-depth timeline and get you and your team trained on the new systems and procedures BEFORE your move. A good place to start is with a thorough understanding of The Protocol, aka The Protocol for Broker Recruiting. Understanding what you can and cannot take with you is crucial. In simple terms, you can take; client names, addresses, phone numbers, email addresses, and account titles of the clients you served while employed by the losing firm. Most advisors prepare two copies of a “Protocol Spreadsheet” one for your employer to demonstrate what you are taking and one for yourself to provide a concise record of that data.

    Next, focus on the systems of your new broker dealer and custodian. Each company has its own way of doing things and without proper instruction you’ll feel like you woke up in a foreign country where no one speaks your language. As you get down to the account level detail focus on margin rate and security based loan rate matching, the various streams of trail revenue you may have on things like life insurance and annuities, and lining up other services you’ve been offering clients like RMD’s, for example. These can be particularly tricky to get correctly mapped, don’t be afraid to provide too much detail. Most of all, ask questions until your satisfied that the answers are consistent and accurate. Independent broker dealers and custodians don’t necessarily use the same language and terms you’ve grown up with, check and double check- and always beware of the half answer. Specifically, my experience dictates the following action steps are worth detailing:

    1. Ensure all positions, money managers, alternative investment strategies and outside investment accounts can transfer to your new broker dealer or custodian.
    2. Spell out each account’s activities, RMD’s, checking, direct deposits, etc.
    3. Detail discounts on loan rates or other priced assets ahead of time, discuss in advance.
    4. Design your client contact plan and content. Role play it.

    Given the stress of being found out, your antipathy for the firm you’re leaving and the late hours required to conduct all of this business in secret, you’re quite likely to want to let the training slide, DON’T! If there’s one lesson our teams would universally share, it’s that the level of training prior to the move is directly proportional to the smoothness of the transition itself. This is where teams have a distinct advantage over individuals as partners’ energy levels ebb and flow it’s easier to stay on task, stay optimistic and hold each other accountable. Stay mentally tough, take advantage of the training and you’ll hit the ground running.

  3. Prepare with Planning: This may seem redundant but we read stories all the time about transitions gone wrong and it’s obvious that what happened was due to a lack of planning or a weak plan that failed. The first rule of transition is that you should not be in a hurry. Speed kills, as they used to say, and when teams are in a hurry, the first thing that suffers is the plan. Too often there is a temptation to try to say “Pass” as if you’ll come back to that or figure it out later. Bad idea. You’re in a gunfight, address the threats in front of you systematically and don’t rush. There’s a reason the military mantra of “slow is smooth, smooth is fast” never goes out of style. Planning the delicate mapping of all of your valuable and value-added services will prevent otherwise costly relationship stress with clients when you need it least.

    Last, plan your resignation and grand opening. Resignation is straightforward when handled properly. This is not the time to play Jerry Maguire or Spartacus. You can come back for everyone later, if you choose. Draft your resignation letter (one paragraph) and get on to the business of opening your new office. Proper planning will have allowed you to test and retest all aspects of your technology; phones, computers, copiers, fax lines, access cards, website, etc. Launch your press release, flip the switches and get on the phone with your best clients.

    In the middle of the battle, take time to smile when your clients start to ask, “What took you so long?” Louis was right, you can’t get around the old minimum wage, but the wages of courage are glory. Enjoy the fight.

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