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Industry Spotlight > Broker Dealers

Five Mistakes to Avoid When Transitioning Your Business

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Having been in the recruiting business for 25 years, I’ve seen advisor moves that have been executed with the precision and skill of a well-planned military operation. I’m also proud to say that I’ve helped to quarterback quite a few such moves.

Others, that I’ve seen, however, were almost too painful to watch. They were kind of like watching a diver leap from a high board and do a belly flop. Ouch!

Of course, in all advisor transitions, certain fundamentals apply.

Most important, do you have an ongoing process that positions you properly with clients? Do your clients view you as an expert on “best of breed” investments? Are you someone they like and trust to have their best interests at heart?

Or, alternatively, are you a mere representative of the world’s most outstanding investment management firm? If it’s the latter, save yourself a lot of heartache and stay home. “Clients” will be happy to have your successor handle their account.

Strict adherence to the recruiting Protocol is another must. Otherwise, you’re inviting legal challenges from your old firm.

Assuming that you pass muster with the above criteria, allow me to open my vault of horrors and share with you some spine-chilling mistakes I’ve seen out there in the marketplace.

Moving with Open Compliance Issues

This bone-headed, impulsive strategy encourages the departing firm to defend themselves against a lawsuit by throwing you under the bus. It invites them to assert that they are a sterling organization of impeccable integrity that unfortunately had some bad dudes working there. Thank God they’re gone!

You need to remain at the firm and conduct yourself as a solid, productive team player.

You should cooperate fully with their compliance and legal team. (Still, you need to monitor their actions carefully and get your own attorney should you feel that nonetheless, the firm is hanging you out to dry.)

When you change firms, the exchanges and regulatory bodies scrutinize your compliance record. Unresolved, open issues may cause individual states not to approve your license until the matter has been adjudicated.

And guess what? You’ll be stuck in regulatory limbo, while brokers from your old firm pound your book. Meanwhile, you won’t get a lick of upfront money until your license transfers over to the new firm.

You’ll soon become a modern day version of “The Man Without a Country.”

Not Properly Incentivizing Team Members to Come with You

Ole King Midas may have been pretty well heeled, but he probably was not a guy who inspired much loyalty. Junior brokers and sales assistants cannot be treated like indentured servants. Savvy advisors recognize that these professionals are important members of the team who can be invaluable in making clients feel comfortable at a new firm.

During a transition, clients know them and should be comfortable sharing Social Security numbers and other information that may be missing on transfer forms. That can be a big time saver.

Like advisors, they need compelling economic incentives to move. Can you provide a special bonus or get the new firm to boost your assistant’s base salary?

Many sales assistants prize job security. Explain why the future is bright with the solid organization that you’re joining.

Discussing Your Upcoming Move at the Branch

Why not just post it on Facebook or give the story to PR Newswire?

Unnecessary heart-to-heart chats in and around the branch office often have unhappy endings.

Save them for family and friends outside the business. As the World War II slogan so aptly put it, “Loose lips sink ships”

Don’t inadvertently give the enemy valuable intelligence!

Having a Disorganized, Poorly Planned Transfer Process

Advisors who move before the proper paperwork has been completed guarantee a rocky transition.

All client spreadsheets should be ready to submit to your new firm immediately after you join. Meetings or conversations with the new firm’s transition team should have been held well in advance to ensure a smooth, Protocol-compliant process.

You or someone on your team should be familiar with the new firm’s technology right out of the gate.

If you are not going to be working with a sales assistant from the new firm, it’s critical to make sure that – at the very least – the sales assistant you are bringing along knows the technology ropes. (As recruiters, we are very focused on these issues.)

Failing to Tell Clients about the Benefits of the New Firm

Clients want to know that you’ve chosen a firm that will allow you to serve them better. That’s why you made the move.

Tell them what’s in it for them and describe how excited your other clients are. If you ask them what they think about the new firm, you may convey your own lack of conviction or be signaling that you moved for some other reason.

Transitioning your business is a complex and often times difficult undertaking. That’s why it’s important to have an experienced quarterback directing the plays.

Mark Elzweig is head of Mark Elzweig Company, an executive search consulting firm in New York.


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