So, you’ve decided to leave the relative comforts of the wirehouse scene and become a true entrepreneur. Congratulations! Have you chosen an existing turnkey platform or are you starting from scratch? Who will custody your assets? Are you a sole practitioner or part of a team? Do you have a support staff in place to help you with the transition?
These are just a few of the basic questions I ask to breakaway prospects. The answers determine the direction of the more probing line of questioning that follows. Determining an advisor’s individual needs is essential to planning a successful transition.
The RIA sector is quickly expanding and evolving to meet the needs of advisors who are choosing independence. New businesses with a wide range of service offerings are popping up all over the map. The days of learning on the fly and hoping for the best are all but over. The community is thriving and people are taking notice.
Despite the rapidly growing list of choices being presented to advisors, the actual process of transitioning client assets from one firm to another has remained much the same. Companies are in no hurry to simplify the methods used, and wirehouse technology is notoriously archaic.
Many platforms and/or custodians offer some level of transition assistance, but the responsibility largely falls on the shoulders of the incoming advisor to secure client commitments and all relevant documentation. One can be easily overwhelmed by the sheer volume of paperwork involved. Having an experienced aide with an operational background can be a game changer.
For some, the answer is simple. Ask your existing support staff to accompany you on your new venture. If you have a trusted individual or team that is willing to leave the corporate world to work for a small business, great! But what if you don’t? Or what if that individual isn’t willing to go? Most large wirehouses are paying the salaries, in full or in part, of client service associates. Those associates have benefits, bonuses, stock options, 401(k) matches, training sessions, catered lunches, HR departments and much more. Are you planning to provide any of those perks? Can you afford to? What might you have to offer that can make up for what will be lost? These are all things to seriously consider before even broaching the subject with your staff.
Another thing to consider when choosing a support staff is synergy. Is this someone you can work closely with? Do your personalities complement one another? Do your skillsets? It might’ve been enough to work with an associate that your clients enjoyed talking to and who adequately completed assigned tasks, but hiring someone to help you run a small business requires a higher level of trust and introduces a totally new dynamic. There is no HR department acting as a buffer, and being a successful business owner does not equate to being a successful manager.
Let’s put all that aside and assume you have a loyal associate who you can afford and wants to join your team. Now consider the actual transition period. Is this person prepared for the initial onslaught of administrative madness that will undoubtedly transpire during the crucial first few weeks of your transition? Are you? Suppose you don’t have help. What then?
Outsourcing part-time assistance can significantly lessen your burden and strengthen your team. Especially if that outsourced help has applied practice. Most advisors only transition once or twice in a lifetime, so where does one find expert support? Some platform providers or custodians have working relationships with industry consultants, but hands-on experience coupled with operational expertise is largely an untapped niche market.
Having worked for an RIA in the past, I’ve met many advisors who have harrowing stories about their transition experiences. The most frequent admission I hear is that they were not as prepared as they would’ve liked, the process was much more stressful than originally anticipated and they wished they had more support. The majority claim that if they had to repeat the process, they would outsource a transition consultant who could focus on process management.
For more information on Grier Rubeling and Advisor Transition Services, visit her author profile.