The Key to a Successful Transition is Asking the Right Questions

When it comes to advisor transitions, preparation is the key to success. However, it’s hard to know how to prepare when you aren’t sure who to get your information from.

The entire process is cloaked in a veil of secrecy and many of the individuals offering to help have their own agendas. Depending on who you talk to, the priorities are different. So, how do you properly prepare yourself?

It all starts with asking the right questions. The answers are different for everyone, which is why there is no central place to find them and depending on who you ask and what the situation is, they could vary.

The more questions you ask, the better. Asking questions opens a dialogue, encourages transparency, and gives you a better understanding of the process.

Since no one is going to have all the answers, you will have to obtain them from multiple sources. Use this article as a guideline to start asking the right questions to the right people. As you start to get answers, those responses should generate more specific questions.

Before you begin the process of transitioning, there are a few tough questions you should ask yourself. No sense in making a life-changing decision that isn’t in your best interest.

Questions to Ask Yourself

Will my clients benefit from my decision to move?
What improvements will they see from this change?
What services will be different for them?
Will I have to change my fee structure?
Will my clients come with me?
How strong is my relationship with them?
Do they value the current custodian or platform I utilize?
Will I (and my team) benefit from this decision?
What improvements can I hope to see for my business?
How will my business operations change?
What new responsibilities will I have?

The first major step in any transition should be a conversation with an attorney to review your current contract. You need to understand what a transition will look like from a legal standpoint before you can do any logistics planning.

Questions to Ask Your Attorney

Do I have financial obligations to my current firm?
What are the terms of my contract and what legal consequences do they pose?
Does the broker protocol apply to my situation? If so, how?
What am I allowed to say to clients, if anything, prior to leaving my current firm?
What do I do, or can I do, with my current client files?
How should I resign – what are the requirements and timeline for doing so?
What do I need to know about amounts/timing of commissions/fees after I resign?
What are some of the most common legal issues you see with teams like mine?
Are there particular firms that seem to be more aggressive in their legal pursuits?
What are some of the things I DO NOT want to do in a transition?

If you work with an attorney for contract review, there might be a few questions you have surrounding timing and registration that would be better answered by someone who focuses solely on compliance. On occasion, you will find firms who combine legal and compliance. Assuming your compliance firm is different than the attorney reviewing your contract, I’ve provided a list of additional questions to start with.

Questions to Ask Your Compliance Firm

How do I register my new firm?
How long does it take the registration to be approved?
Do I need to keep my licenses?
Do I register with the state or the SEC?
What are the responsibilities of the Chief Compliance Officer?
What firm documents do I need to have prepared?
What information belongs in my advisory agreement?
Do I need to have a separate agreement if I charge for financial planning?
When should I resign from my current firm?
How long after I resign will I have to wait to start calling my clients?

Once you understand what a transition should look like from a legal and compliance standpoint, you can start planning the logistics of the process. The custodian will likely assign an internal transition team to help you understand the process of repapering your accounts. The more complicated your book of business, the more coordination the process will require.

While the transition team is trained to ask you the right questions, they’re only allowed to obtain limited information from you prior to your resignation. Therefore, you’re required to do the bulk of the prep work on your own.

It’s important to understand exactly what the process entails. Asking general questions that eventually lead to more pointed questions is the best way to do so.

Questions to Ask Your Custodian

How do I find out which of my current holdings are eligible on the platform?
Are there any account types that aren’t supported?
What are the different methods for sending paperwork to clients?
Do you have a corporate account with UPS/FedEx that provides discounts?
Do I need to purchase Docusign or a form of it?
Are there account types or forms that are not DocuSign eligible?
Do you provide a way for me to electronically send my firm documents to clients?
Do you accept forms that have been electronically signed using an outside platform?
What are the full requirements for each account type?
Is any outside documentation required for new accounts?
Do you require copies of statements for account transfers?
Are there any integrations that allow us to upload data from a CRM?
Can paperwork be sent by household or does it need to be done on an account level?
Will account transfer fees be reimbursed?
Am I required to open the accounts or is that done internally?
How will I be informed when there are issues needing resolution?
What types of communications will my clients get from you?
How long should I expect the transfer process to take for each account?
Do I need additional forms to give my clients online access? What about the ones who also want to be able to see their spouses accounts?
How can I consolidate confirms and send them monthly or quarterly?

Even after you, your attorney, your compliance team, and your custodian answer these questions, you might still have some that don’t seem to fit into any of the categories. I often have advisors reach out to me who just want to “pick my brain”. As someone who’s been helping with transitions for over a decade, I feel qualified to answer a lot of the “random” questions. To provide some context, I’ve included some of the most common questions I get from advisors.

Most Common Questions I Get From Advisors

What sort of communications should I have prepared to send to clients?
Should I have a script prepared for when I’m speaking with clients?
Should I send all the packets to clients via DocuSign or by mail?
Do I send the paperwork blank for clients to complete or complete it before sending?
Do you have any suggestions for what I should be doing for the few hours it takes my registration to be completed?
Would you recommend an email blast to clients right off the bat, or should I call first?
When will clients start getting contacted by advisors from my former firm?
How long does it take clients to get their paperwork once requested?
How long does the entire transition process take?
What do I say to clients that I don’t want to bring with me?
What kind of issues can I expect to see?
What kind of questions will the clients have about the process?
How do I keep track of everything I’m doing?
How do I staff my team appropriately for the process?
Are there resources available to make the process easier?
What time of year is best to start a transition?
What day of the week is best to resign from my current firm?

If you find yourself seeking the answers to some of these questions, reach out to me at grier@advisortansitonservices.com and I’ll be happy to help you find them.

The Takeaway

The most important thing to remember is that you are not alone in this process. However, you are the one solely responsible for your decisions, so make sure you’re making the right ones. Asking questions helps point you in the right direction and gain a better understanding of the process. If you don’t feel comfortable, just keep asking questions until you do. Best of luck!