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June 20, 2016 at 08:00 PM
He who hesitates is lost.
Once an advisor decides to leave a firm, the sooner he or she departs, the better. Procrastinating and postponing the move exposes the advisor to unnecessary risks.
Let me explain.
Once advisors decide to jump ship, their production typically drops. That’s because they no longer can work with the same level of intensity as before. The prospect of changing firms is a distraction from the total business focus that advisors must maintain in order to be successful.
The time spent out of the office kicking the tires at prospective firms is another drag on an advisor’s productivity. Once an advisor knows that they may be leaving, it’s hard for their gross production not to falter. That’s why many firms will lock in an advisor’s “trailing 12” for 60 days once they present them with an offer.
In strong bull markets, I’ve seen advisors with a long-term strategy successfully ramp up their businesses and then hit the bid elsewhere. But, of course, that’s more difficult to do in today’s volatile markets with lackluster returns. Many advisors are struggling to keep their gross production at previous levels.
Market volatility is another danger. Whipsawing markets can unnerve investors and cause them to back off from investing. An advisor who is suddenly overwhelmed with additional demands for client service is often too preoccupied to entertain a move.
Even worse, challenging markets can sometimes generate customer complaints. Once an advisor has an open legal issue, it’s no longer possible for him to move.
This is because prospective firms may need to wait until the matter is concluded to be able to make a hiring decision. Also, depending upon the severity of the accusations, regulators may require closure before approving a license transfer to a new firm.
