Advisor Service Models and How They Effect Transition

If you have been in the industry long enough, certainly you have heard horror stories about Advisors who have changed firms or broken away only to lose clients along the way.  The stories were/are prevalent in all channels regardless if you are a wirehouse Advisor, independent Advisor or affiliated with an insurance-based broker/dealer or bank.  These stories are sometimes fabricated by branch managers to scare everyone straight (I am thinking of my former wirehouse!) and sometimes they are true.
Let’s start by exploring the cases that are true.  Typically it is obvious why this happens.  An Advisor is not happy with their practice’s growth and often is pressured by their firm to produce more.  Let us not corner only employee-channel firms here.  The Advisor may react by moving to a new firm that has a polished recruiting strategy and easily attracts this Advisor.  However, the Advisor has never been proactive and plateaued early on, in their career.  They reached this plateau because they did not build or adopt a system to manage their clients and practice.  Clients were never segmented nor were they ever called or asked to meet on a monthly, quarterly or even annual basis.  These clients typically spoke with their Advisor when they called the Advisor, which left the Advisor in a defensive position.  One can quickly see the death spiral begin in which attrition culminates after their move to a new firm. 
Why?  Clients choose to work with the Advisor, not with the firm that he or she is affiliated with; yes wirehouse Advisors, this is true.  We are all empowered to make choices based on what is best for us.  After experiencing varying amounts of poor service, we will make a change.  So, when Advisors make the change for a “new beginning” or “upgraded platform”, clients exit stage left.
When consulting with our Advisor-clients during a transition we always ask: what does your client service model look like?  We tell them that they don’t need to answer the question to anyone but himself or herself, but the answer will dictate client retention.  There are other factors that can affect client retention during a transition, but there is no other single factor that has a more profound negative or positive effect than how an Advisor services his or her clients.  Period.  We recently counseled an Advisor who was moving.  One week prior to the transition date, he asked me if it would be okay for him to speak with his compliance officer, an individual whom the Advisor trusted and held in very high regard.  He thought the compliance officer could make his outgoing departure smooth.  For the record, we strongly advised him not to share this information and in the end against his better judgment, he told his secret.  This particular incident is only resulting in one lost pay period of fees and commissions, which is not easy to stomach.  However, it could have been much worse.  Outside of your spouse/partner and attorney (and recruiter!) never, never tell anyone, as it could result in immediate termination which leaves Advisors in a defensive situation. 
The majority of Advisors do subscribe to tremendously effective service models and we often see client or asset retention as high as 90+%.  This is not an outlier, rather the norm.  This retention begins years before an Advisor is even thinking of changing firms, as the Advisor’s business processes are creating clients for life.  They become the trusted Advisor and occasional poor performance results do not cast a shadow on the relationship.  Having taken my own book of business through a firm change, and then helping dozens of Advisor and teams make a move, we consistently see client retention between 70 and 90+%.  More often than not, the 70% cases are by design.  One of my favorite stories, told so much more eloquently than I can, comes from an Advisor in Cleveland, Ohio.  He left a wirehouse to affiliate with an Independent broker/dealer.  “John” segmented his book A through D, as so many Advisors do.  Upon resigning, his “A” clients received nothing short of white glove service to ensure retention.  The “B” group received very close to the same level of attention, as they were also very important to his business.  John mailed one letter to his “C” clients and if they did not respond to the letter, so be it.  His “D” clients were never notified of his move!  John said he was more profitable than ever from day 1 post-move, and more importantly he was now running a highly efficient practice.
In the end, Advisors who are considering a move to ensure an increased client experience will enjoy high retention.  This is due to the fact that they are client focused and are building their business to prosper long term based on the client.  If one finds themselves on the other end of this spectrum, please consider a renewed focus to strengthen client relationships.  If possible, stay where you are because in most cases, happy clients dictate Advisor’s success and not the firm affiliation.

Ned Van Riper, a 14-year industry veteran, is Managing Director with Finetooth Consulting that provides customized transition solutions to Advisors seeking a new firm.  He is also Co-founder of, which matches Advisors and firms based on suitability metrics. 


Yes that's right this is not

Yes that's right this is not an outlier. It was started years go with adviser is even thinking of changing firms.

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