How To Get Organized Before Transitioning Your Practice

Sixty percent of advisors say they have put off their transition because of a “fear of the unknown”, citing client attrition and the scale of administrative duties as reasons why they do not want to take the leap.

I have sat on all sides of the proverbial table as it relates to transitions. I've helped advisors prepare for transitions. I've coached them on choosing a firm. I've helped them break up with partners. And over the last 3.5 years, I've actually physically helped them transition them to my firm, Journey.

I can confidently say that 99% of the time, the advisor's fears around transitioning did NOT come to fruition, especially and most specifically, the fear of losing clients. (Advisors are notorious for undervaluing themselves and failing to recognize just how beloved they are by their clients). The only exceptions I have seen were cases where the advisor did not have strong personal relationships with clients to begin with or situations where the relationships were actually sourced by the firm and not the advisor.

Now, transitions are hard. And they're stressful. Anyone who tells you they are easy-breezy is probably trying to sell you something. Even if its a totally friendly transition and you're keeping the same custodian, there is still SO much to think about and manage.

Regardless of what type of transition you are about to execute, there are very specifics steps you can take to make the process simpler and set yourself up for success.

I lay out a few of the most critical steps in this article. I hope you find it helpful.

Before you read ahead, remember that to make a transition successful you should ensure you have the:

• Time - Give yourself at least six months for organization and preparation purposes.
• Knowledge & Organization - Clean your data. Know your data. Organize your data.
• Attitude- This is an overlooked point. The more anxious, frantic, negative, and micro-managey you are about the transition, the more stressful it will be. ALWAYS. Things will inevitably go wrong. Stay focused on the BIG picture and the relationships and communication you have with clients.

Five Steps to Prepare Your Book of Business for Transition

1. Check Your Employment Agreement

Before you do ANYTHING else, hire a lawyer and have them review your current employment agreement, operating agreement and wealth management agreement with clients. Are the client relationships yours or the firm's? Is there a garden leave period after you resign? How do you actually resign? Can you legally download copies of your clients’ financial plans? Are you allowed to export client data from the CRM? Do you have to disclose what you’re doing?  An attorney can answer all of these questions.

There are a few possibilities:

• The best-case scenario: You have no obligations to your current firm and can leave freely whenever you want. While you will still need to notify your current firm and agree on when your last day will be, there will typically not be any restrictions around what information you can take with you on the way out.
• The worst-case scenario: The clients belong to the firm and you are not allowed to solicit clients, or even engage with them while you're exiting and after you are gone.

Oftentimes, advisors find themselves somewhere in the middle. A common scenario is that once you resign you will have enter into a "garden leave" period, during which time you cannot engage with clients. Once you are gone you may be able to take only basic client data with you (name, phone number, date of birth, address) and will essentially have to reach out to clients, let them know you have joined a new firm and then send each of them paperwork to transfer their accounts after they have agreed to join you. This is a tedious process but a common one that the firm you are joining should be familiar with.

You may also be able to take all of your client data like account numbers and statements.

Either way its critical to understand what you should and should not do or take while transitioning. Even saving financial plans as a PDF or downloading reports from your CRM, while you're preparing to transition, could trigger a lawsuit from your current firm.

2. Get Familiar with the Tech Stack

We're going to assume for the purposes of this section that will have an amicable split with your firm and can take your data.

In that case, the ideal outcome of the transition would be to seamlessly switch your client data into your new tech stack which can sometimes be tricky.

Identify the systems you will be using – email, portfolio management/ rebalancing / billing, financial planning and CRM - and spend time understanding the connectivity points with your current tools.

Sometimes, even if you're staying on the same software, there can be challenges with transferring data. For example, you may be using a financial planning tool at your current firm. Even though you are independent at that firm, the license offers you a customized (oftentimes watered down) cersion of the software. Thus, if you were joining a new firm, you'd need a new license altogether. Your current data wouldn't transfer to that new license and you'd have to recreate, in this case, all of your financial plans.

In some instances, the vendor will offer services, for a fee, to help you manually recreate each client instance.

As for portfolio management and reporting software, if you are moving to a new vendor, expect the process of retrieving or recreating all your old performance data to be clunky and in some cases, simply not worth the attempt.

Remember that the firm you are joining should be able to help you with these conversations and in many cases will also pick up the cost associated with transferring data.

You will need to ascertain:

• What software you plan to keep or change
• What data is and isn’t transferrable given your contract and the vendors you are dealing with
• How and who will transfer the data to the new system
• What support is available, if you are moving to a new firm or using a transitioning support service
• When you will transfer data and how long it will take

This should all be stored in a checklist that enables you to plan and execute the transition as smoothly as possible.

3. Gather Your Spreadsheets

If you have the all-clear to extract data prior to your transiiton, you will need the following data compiled into a master spreadsheet:

• Client demographic data: Your clients’ names, household info, birthdates, addresses, emails, phone numbers, social security numbers, etc.
• Client account data: All your clients’ accounts, including registration types and beneficiary information. It is also important to have your clients’ asset allocation, tax budgets, etc.

You will likely derive all this information from two primary sources: an export from your CRM and an export from your custodian. If you are moving to a firm that provides transition services and support, they will likely provide the configured spreadsheets for you so that you don’t need to worry about creating them yourself.

This is where I have seen some things go wrong. Advisors may have data in several locations and become fixated on all of their spreadsheets vs. using the singular template they have been provided. Remember that you will be able to "fill in gaps" after the transition. What's critically important is having the core information organized and accurate so that you can move accounts quickly to your new firm.

Remember that your CRM is your golden source of truth. Take this opportunity to rigorously inspect the data for gaps or errors, prior to exporting it. Even a single typo on an email address, such as “.con”, can cause significant delays during the transition process – and will be much harder to identify later in the process.  All of this data will be used to populate new account paperwork which will ultimately be sent to the client for signature; which means that this information should match the information that is at the custodian and actually on the clients' accounts. (If you are staying at the same custodian, your transition may be drastically different than if you're going to a new custodian. In some cases, if the custodian allows for negative or even positive consent, you will not have to send any new account paperwork to the client).

Now, unfortunately, there are some instances where you will not be able to take client data with you, specifically when you are leaving a captive firm. In those instances, you will want to consult with an attorney on your rights:

• Are you allowed to publicly source client information?
• Are you allowed to simply promote on social media that you have left your firm and provide generic contact information so clients can contact you?

There are other instances where you may be leaving a firm that adheres to a policy called Broker Protocol, which dictates that advisors leaving are only allowed to take a few key pieces of client data with them, typically the clients’ names, addresses and telephone numbers.

4. Prioritize Your Households

You cannot feasibly transition all clients simultaneously, which means you need to prioritize how you will contact clients and move accounts. Organize your client account spreadsheet into categories dictated by the level of the relationship as well as the urgency of moving the account. (For example, your parent or spouse's account may take a lower priority than the account of a top client.)

This list will help you and/or your transition team stay organized around who will be personally contacted and will receive paperwork, immediately on the first day, and then on the days that follow.  This is especially important if your contract with your former employer states that you cannot contact clients before the transition date or end-of-garden leave date.  In that case you will need to go one by one, reaching out to clients atfer you are gone, and you will need to have a plan and order for how you do that.

5. Prepare Your Communications

One, sometimes overlooked step, is to prepare a communication plan for your transition announcement. Advisors should not be drafting emails the night before their transition; these messages should be planned in advance.

Spend time thinking about the angle you want to make when explaining your transition. My advice is to be honest and transparent and focus on what you are looking to achieve for clients as a result of the transition. You may choose to focus on the robust tools and services that your new firm has to offer, or you may want to explain that you are looking to operate only under a fiduciary umbrella. Either way, remember that you are a business owner making a decision that is best for your clients and business and have conviction in that decision.

Once you are formally gone from your firm, assuming you are allowed to, you should:

• Send a mass communication to all clients explaining that you have left your firm, introducing the new firm you are joining, and laying out what they can expect over the coming days. I recommend including a few lines about when they can expect paperwork and where the paperwork is coming from (i.e., the docusign email address). I would send the communication from a marketing tool if you can, so that you can track delivery and open rates. Some advisors choose to embed a pre-recorded video or voice note in the communication, explaining the reason for the change.  Others offer links to other documents, like a "FAQs" sheet that answers common questions like, "What is an R.I.A.?" You will want to be careful if you are maintaining a broker-dealer affiliation. B/ds have their own guidelines and rules; in some cases, they will not approve the use of common marketing communication tools like Hubspot.
• Reach out to clients individually after the mass email has gone out, and let them know verbally about the changes that are coming.
• Send a templated (but customizable) email to each client once they verbally agree to join you. Lay out clear details about the docusign process, what you'll need from them (e.g., a voided check), and how long it could take for their accounts to transfer.
• Change all of your social media pages and consider dropping a post on each site announcing the transition and linking to either a video you have pre-recorded OR your new site.
• Send another templated email out a few days after the transition letting clients know that either accounts have been transferred, or are in process. You'll also want to direct them on where to sign in to see their accounts, and ultimately their financial plan data.

Remember that people want to feel informed and would much rather their advisor reach out to them first then the other way around. Even if you have no updates, communicate that you are on top of the transitioning of their accounts.

These are just five of many, many other steps you will need to take before and during your transition. I have found that the more time you spend really acclimating yourself with the process and mentally preparing for the fact that its alot, but worth it, the quicker you will come out on the other side. Finding the right partner is crucial to this as well, as they will be able to support you through this process and in many cases handle almost all of it on your behalf.

On a final note, whenever you feel doubt creeping in, talk to other advisors who have transitioned. You will rarely, if ever, hear folks talking about regretting the decision to transition.

Related: How Highly Successful Advisors Drive Organic Growth