Succession Planning 401: Transitioning Clients to New Advisors

One of the cornerstones in running a successful RIA firm is to effectively transition your clients over time to other advisors. This is critical so that you can free yourself up to do the things you do best: run and build a firm, develop more business and acquire new clients, or some combination of those activities. It also is important to transition clients when an advisor leaves your firm, or to better balance the client load among advisors. 

In my previous posting in my series of Succession Planning blogs, I discussed how you can identify and hire the right advisors as potential partners and successors. The next step in this process is to convince your clients that since you trust these new advisors, they  should trust them as well. With their money. With their futures. It’s not a lot to ask, right?

Whether you choose internal advisors or hire from the outside, introducing a new advisor to your clients doesn’t have to be a deal breaker. You just need to take a thoughtful approach to ensure a smooth transition. 

Introducing Clients to New Advisors

You’ve done much of the work already. You chose an advisor who fits into your firm and who shares the same philosophy about financial planning as you and your team.  Now think about your clients. Who among them would benefit most from this new advisor’s expertise?  Who would be a good personality fit?

If possible, start small by choosing a select group of clients who would react positively to a new face.  Bring them to a client meeting, introducing them and highlighting their strengths that could benefit your clients—build them up!  Then let the advisor speak briefly about his or her own background, and then speak to the client’s situation and concerns. This demonstrates understanding and helps immediately build the relationship between the new advisor and the client. Continuity and cohesion are critical to transition planning.  Clients need familiarity while setting their expectations that change is good. 

Managing the Handoff

The age-old wisdom bears appropriate fruit:  Let go, but don’t let go of the client rope. Whether a junior partner or an outside hire, this advisor is simply new to your clients. Transitions should always take place in person, and since meetings with clients are spread out annually, bi-annually, quarterly, etc., you should expect the process to take some time (at least several meetings) to ensure success.

The time involved in terms of the number of meetings really depends on the situation.  Are you the sole owner and now beginning to transition clients to a junior advisor for the first time?  If this is the case, it will take a much longer time because not only are you transitioning clients you are also mentoring and training this advisor. 

Initially, the new advisor might not play a significant role in meetings with clients. Rather, they should take copious notes and get to know the clients from a support perspective—and observe!  It is also very important to debrief with the advisor after each meeting: review what they observed, point out important things you did in that meeting, etc.

In subsequent meetings, the new advisor can begin to handle parts of the client meetings, albeit with you in attendance. By now, the advisor knows all of your stories and is telling them by heart. Keep in mind that how you position the advisor with clients can help or hurt their odds of gaining a client’s trust. You don’t want to give clients the impression that the advisor is an “underling” and that you’re assigning them to a junior advisor because they’re not a priority to you. The opposite is true: because these clients are important, you want to make sure that they’re taken care of long after your retirement and well into theirs. 

Be the tortoise, not the hare.Transitions are evolutionary, and no one knows your clients better than you do. It’s important to move at a pace that feels right for each client. Don’t rush the process.

If you are transitioning clients among experienced advisors, then the process is similar but really only one meeting is necessary. The ingredients are the same:  build up the expertise of the new advisor—present the change as a great thing for the client and assure them that both advisors are on the same firm-wide “philosophical page” and that you are still available for advice and guidance.

Evolving Your Role

Once the client transition process is underway, it’s time to re-define your role in the firm. Have you spent the majority of your time interacting with clients? Maybe now is the time to focus more on your leadership role or on business development, ensuring a prosperous firm for years to come.  You can also concentrate on legacy-building initiatives that share your knowledge and wisdom with the industry and with consumers.

Whatever you decide, take advantage of this new phase of your career to achieve what you likely had little time to do before.  Embrace the opportunity for your firm to grow, for your career to evolve, for your impact to increase.  Passing the torch means you’re now available for what’s next.

Page 2 of 2
Single page view Reprints Discuss this story
This is where the comments go.