What You Need to Know
- Firms should aim to gradually establish a relationship between the client and the new advisor.
- Lay the groundwork for the relationship with the new advisor through phone calls and email.
- Clients who are being shifted will inevitably have questions, and some will be more difficult to satisfy than others. Be clear but diplomatic.
“How do we transition clients?” That’s a question Herbers & Co. is hearing more and more from financial advisors.
Successfully moving a client from one advisor to another doesn’t have to be complicated. But before I get into that, let’s look at why the topic of client transfers has become so popular.
For the past decade, there’s been a perceived shortage of financial advisor talent within the industry. Some have argued that there’s little to be concerned about: Capacity challenges will be solved through technological innovations. Others argue that clients need human advisors to understand their emotions, and then help them pivot with confidence to facts and figures.
In the past couple of years, it’s become clear that we are indeed short of advisors. Asked to name their top business challenge, firm after firm will point to the difficulty of recruiting, training and retaining talent. Amid the human resources crunch, advisory firms continue to grow. To accommodate that growth, they need more advisors — who are in short supply.
Thus, organizations have been looking at ways to serve more clients with the human resources they have. And many are finding that the best solution is to transition clients from busy primary advisors to advisors who have excess capacity.
Firms often have a hard time moving forward with client transfers, though. One reason is that they fear a negative reaction from the clients that may threaten growth. Thus, the question: How to effectively transition clients without losing them?
Here are some guidelines to help transition clients.
1. Take It Slow
The first rule of client transitions is to go slow. Don’t send a letter to the client informing them that they’ll be working with another advisor; that will only create fear and uncertainty. Instead, aim to gradually establish a relationship between the client and the new advisor.
Many firms will begin the transition by having the “new” advisor at the next client meeting. Rather than focusing on meetings, having the new advisor answer clients’ questions between meetings often builds trust faster.
If the client emails, the primary advisor forwards it to their colleague. The client hears back from the new advisor, explaining that the request was forwarded to them, and adding that they’re happy to help, while explaining what’s been done in response, or what the client might do.
Likewise, an incoming phone call may be routed to the new advisor, or the new advisor might return a call placed to the original one. The key here is that the new advisor be perceived not as a replacement but as an added, helpful resource.
2. Transition the Meetings
Once the groundwork for the new relationship has been laid through reactive responding to a client email or phone call, the next step is transitioning the client meetings. Ideally, the original advisor leads the first meeting or two, then steps back to let their colleague run the meetings, and then lets them take over the meetings completely.
This sounds straightforward on paper, but in real life, human psychology can get in the way. Often, it’s the advisor who has a harder time letting go of the relationship than the client. Many advisors believe that clients need them — them specifically — more than the clients themselves do.