Planning a Transition to a New Firm?

Tips to Help with Timing and Preparation

The thought of moving to a new firm can be overwhelming, if not downright terrifying. You may wonder if you’re making the best decisions to maximize your transition. A little advanced planning can help you time the move and prepare for a smooth transition.

Timing Your Transition

Advisors often ask me, “When’s the best time to make a move?” and “Is it ever too late?” Both are great questions that should be taken into consideration before transitioning to a new firm.

Most advisor contracts run from eight to 10 years, and it’s typically not wise to make a move until you are done, or almost done, with your contract. If you leave too early in the life of your contract, you may need to repay some money to your current firm.

Once you have completed, or are close to completing, your contract, it’s never too late to change firms. You can move at any point in your career. Many financial advisors nearing retirement choose to make their final move either to a major firm or to the independent platform.

If you choose to move to a major firm, you may be able to reap the full financial rewards of moving AND receive an additional 150%-200+% from the firm to buy your book of business. This is one of the few cases where double-dipping makes sense!

You may also consider going independent. In this case, you would likely receive a SIGNIFICANT multiple of the profitability of your book.

There’s no one-size-fits-all answer when it comes to timing your move; however, Michael King Associates is here to help optimize your timing and maximize your payout.

Preparing for the Move

Another question advisors often ask is, “How can I put myself in a position to get a better deal when changing firms?”

The best way to prepare for a move is to make sure your book of business is in the best position possible. You will maximize your deal potential when your clients are happy. This normally occurs when the stock market is up.

Many financial advisors have had a positive experience transitioning to a new firm during the COVID-19 pandemic because they have had frequent contact and built strong relationships with their clients during this period of time. It’s a time when clients’ loyalty to their advisor has been stronger than their loyalty to the firm. In addition, many firms have had a difficult time going after clients because they do not have the staff available to do so.

The first step in determining the strength of your book is to go through, client by client, and assess how many will likely follow you, how many will likely choose to stay with the existing firm, and how many will be undecided. If you believe a majority of clients will follow you to the new firm, it may be a good time to make a change.

Considerations
When considering a move to a new firm, advisors also ask, “What should I be on the lookout for/worried about?”

There are several considerations to keep in mind as you weigh your options.

  • Transfer fees – Some receiving firms charge a fee to clients for establishing a new account. Obviously, this is a deterrent for many clients. Make sure your new firm is willing to waive new account fees for a period of time while you transfer your book.
  • Specialty products – If you have clients invested in specialty products at your current firm, they may be hesitant to transfer their accounts if the new firm does not offer a similar option. If your relationships are especially strong, these clients might be willing to leave a piece of their business at the existing firm while transferring the balance of their account to the new firm. Taking part of your book is better than taking nothing! You can always bring the rest later. However, this is something to explore prior to making a move.
  • Firm employees – If you work with employees or retired employees of your current firm, it’s important to gain an understanding of their legal restrictions. Sometimes, employees of a firm are not allowed to move their accounts to another firm. Consider these restrictions as you evaluate how much of your book will need to stay behind.
  • Legal arrangements – It’s also important to gain a thorough understanding of what you’re legally allowed to tell clients leading up to the move. In many cases, advisors are not legally allowed to tell clients what firm they’re moving to until after they have left their current firm. Your new firm should provide a lawyer who can help guide you through the transition process.

At Michael King Associates, we have decades of experience helping advisors navigate the various challenges of moving firms. Before you make a move, contact us for guidance. We can help you evaluate all your options and maximize your deal.

For more information about how we can help you negotiate the best possible transition package, please contact me directly at michael@michaelking.com, call the office at 212-687-5490 or call or text me on my cell at 917-747-4805. Remember, whatever we discuss is TOTALLY CONFIDENTIAL. Our firm has been around for a long time because we keep our word. At Michael King Associates, we specialize in helping advisors find their ideal place and achieve their best career path. We are your go-to “MATCHMAKERS!”

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