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Practice Management > Building Your Business

Tips for Switching Firms the Right Way

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Financial services recruiters think that there will be mass movement of financial advisors between firms in the coming year. So if you’re thinking about making a move, you’re going to have some company.

Planning the transition from your initial investigation of target firms all the way through the process of severing your ties with your previous firm is essential if you want to avoid the snags that can delay or even halt the process.

Is your resume positioned to catch a recruiter’s eye?

Fins, a Wall Street Journal affiliated financial jobs site, has some advice for experienced advisors who are looking to make a transition between firms.

Specifics are essential. Use your resume to give recruiters an inside perspective on your business and the skill-sets you leverage for success. Show them how you go about generating revenue for your firm by giving them concrete numbers to spark their interest.

But don’t get so carried away with details that recruiters lose sight of why you are effective. Provide them with a summary paragraph that encapsulates the ideas and figures that define who you are as an advisor.

Despite the importance of demonstrating your success, don’t stop there. Recruiters also want to see that you are engaged in relationship-building activities that cement your current client relationships and bring new business to your firm. Include details about your nonprofit and volunteer activities, industry association memberships and speaking engagements.

Use your resume to demonstrate your skill at building long-term relationships. This shouldn’t be just a few bullet points with general language about your considerable relationship-building skills. Tell a story that gives recruiters a clear picture of your modus operandi by reflecting—in a concise way—on your ability to building strong client relationships.

But despite the importance of building yourself up in the eyes of the recruiter, don’t exaggerate.

If you get the call, how are you going to manage the transition?

You’ve made the decision to switch firms and get the call from your target firm, but don’t hurry through the transition. There’s a good way to go about making the move—and a bad way.

First, read your current contract (and consult an experienced employment attorney) to determine what obligations you have to your firm. If you received any incentives when you joined the firm, were they structured as forgivable loans? If so, have the loans been forgiven, or are you going to be hit with a massive bill? Some firms include a clause in their contract that will require you to pay back tens-of-thousands in “training expenses” when you make the move.

You’ll also need to determine if you signed a no-compete clause and ask your attorney whether your new employment will violate that agreement or whether the agreement may be so broad that it is unenforceable.

You’re also going to need to determine what your contract says about client information. Are you allowed to take client information with you when you leave? Or does your contract restrict that right?

Once you’ve determined that a move is not only possible, but financially advantageous, make sure you give written notice of your resignation to your current firm and specify what client information you are taking with you.

Use good faith when you compile your list of client information and make sure you don’t take any prohibited data—e.g., Social Security and account numbers—with you. Don’t take clients that you shared with others (without permission) and don’t pre-solicit clients before you leave the firm.

Your old firm isn’t the only entity that can take an interest in your transition between firms. The SEC and FINRA can take enforcement action against you if you misuse confidential client information in your transition.

Taking shortcuts in your transition between firms can transform the move into a nightmare, burning bridges at both firms. Use your good judgment and seek out the advice of a competent attorney early in the process.

For additional coverage of this issue and similar ones, we invite you to sign up with AdvisorOne’s partner, AdvisorFX, for a free trial.

See also The Law Professor’s blog at AdvisorFYI.


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