5 Questions to Ask Before You Switch Firms

Characterizing 2022 as eventful would be an understatement. Inflation is at 40-year highs, driven by government spending, supply chain issues and commodity price spikes exacerbated by the war in Ukraine.

At the same time, the Federal Reserve has been aggressively raising interest rates to tame inflation without triggering a deep recession. All this has caused the most prolonged stock market pullback since 2008, with all major indexes in bear market territory.

So, is this the right time to change firms? It depends on your reasons.

Regardless of what ambitious recruiters say, there is never an ideal time to make such a major move. Repapering clients and explaining your motives for leaving your current situation is never an easy process.

Doing it during these market conditions may increase the degree of difficulty. However, switching firms, even now, might be the best option for some advisors.

1. What is driving your desire to change?

Changing firms, even during the best of times, is not something that should ever be done on a whim. If you are relatively content with your firm, it’s probably not worth making a move, regardless of the check that’s being waved in front of you.

But you will know it’s time to move if there is a major catalyst that directly affects your current and future business prospects.

2. Are you feeling marginalized?

In a quickly consolidating industry, many firms focus their resources on growing by acquisition instead of supporting existing advisors. It may be time to move if your calls to management are no longer being returned and you feel more like a number than a productive team member.

3. Have service levels deteriorated?

It might be time for a change if you no longer receive the personalized home office support necessary to service your clients and grow your practice or if your firm does a poor job of rolling out and supporting new and best-in-class technologies.

4. Are the economics no longer in your favor?

Does your firm’s cost of affiliation (operation, technology and errors and omissions fees) continue to rise every year? Does it seem like they keep moving the goalpost on the production requirements needed to maintain revenue?

5. Have you lost confidence in your firm’s leadership?

Does the executive team seem to be preoccupied or moving in a troubling direction? Has the corporate culture changed so much that the firm’s values no longer match your own?

If you say yes to any of these questions, it may be time to leave.

A Successful Transition

The decision to change firms should not be made lightly or be based on upfront money. A smooth transition requires a commitment from you, your staff and your clients, so it’s important to evaluate your current relationship with your firm.

There’s never a perfect time to make a change. There is always some headwind that can make you reconsider the idea. It’s imperative to find the right partner so you can establish a relationship that allows you to express concern if there’s a feeling of lack of support.

Changing firms is never an easy decision, but it’s an important one because it has far-reaching implications for all involved. Working with people you trust and believe will support you and your clients is a critical first step when weighing your options — especially in periods of instability.

Mark Contey is a senior vice president and head of business development for LaSalle St. 

(Image: Shutterstock)