Transitioning Wirehouses

Transitioning Wirehouses? 5 Tips for Exiting with your Book (and Integrity) in Hand

You’ve made the big decision to transition to a new wirehouse. Or, you’re taking the plunge to independent status. Change is good. Now, it’s time to make a smooth transition. You’re ready and excited. But, how will your clients react? And, will your current firm make waves about taking your clients’ assets along for the ride?

We recommend handling this transition as cautiously as parents divorcing; never speak ill of your former partner or employer. By doing so, you’ll mitigate damage and preserve dignity all around. The goal is to get out with your reputation, and your clients, intact. So plan ahead. Never speak ill of your former broker/wirehouse; use discretion in talking with other people before the move; and most importantly, engage your clients in the process. Here’s how to make an exit without causing (too much) of a stir:

  1. Plan carefully before resigning.

Once the decision has been made, take a couple months (if possible) to understand the varied contractual responsibilities you have to your current firm — before turning in your resignation. Refrain from sharing the news with family members, colleagues, clients, or friends who might accidentally spill the news. An ounce of prevention is worth a pound of cure.

  1. Never speak ill of your current firm/partner/broker.

Use discretion in how you speak about the situation from which you’re departing. This goes for everyone — clients, your new firm or partner, and anyone in your family or circle of friends. Craft a careful response to questions about why you’ve chosen to leave: You’re simply in search of a change, looking for new opportunities, or going independent to garner access to a broader range of products. Make it clear there is no ill will (even if there is), and that you’ve appreciated your time at your current firm. Never burn a bridge you may have to cross later. The goodwill you give will ultimately be returned.

  1. Enlist legal counsel and expert advice.

As an advisor you spend a lot of time selling people on the idea of hiring you because of your expertise. Now is the time to assemble a team of professionals who know more than you do. Consider consulting with an attorney who can help navigate the transition. Together you’ll need to confirm there are no restrictive covenants related to taking your clients’ business with you. Do your homework and choose an attorney with experience navigating the Broker Recruiter Protocol, which puts protections in place for both clients and advisors during transitions. You want to be prepared ahead of time if there is any indication legal action could ensue. You may also consider teaming up with a business that provides consulting on transitions.

  1. Meet with clients personally after your exit.

Refrain from letting your clients know about the switch until you’ve made a gracious exit. It could be detrimental to your exit strategy if your firm suspects you’re soliciting business before you leave. Then, meet as many clients as possible personally and explain the upside to the switch. Set the expectations; explain that you’re going to need a few signatures to garner their permissions. Tell them you’ll do everything in your power to make the transition seamless. Offer thanks and gratitude for their loyalty. (Hopefully, you’ve been building these relationships all along, and won’t have to work too hard to sell your value.)

  1. Remain calm and confident as you leave proprietary assets behind.

Breaking up is hard to do. Chances are, your broker/dealer isn’t going to welcome your departure with enthusiasm. You’re likely taking clients, and profitability, away. It’s not going to feel comfortable, and intimidating tactics may ensue. This is why preparation, and acting with integrity, is critical. Don’t give anyone reason to believe you plan to share proprietary information. Return training materials, promotional collateral, flash drives, and internal documents. Make it known you simply want to retain the clients you worked hard to win and nourish. Respond calmly and promptly to defensive questioning or threatening letters, but continue to operate as though everything will move forward without a hitch. It will, if you’ve planned ahead. (Did we mention that already?)

If you know it’s time to change firms, but you haven’t started planning yet, now’s the time to do your research. Use an online tool, such as 3xEquity’s Instant Offer to see which Broker Dealer can make you the best offer that fits your needs. Also, you can use 3xEquity’s Transition Comparison Tool, to compare reported wirehouse packages side-by-side. Make changes to the offers by adjusting your current or planned revenue, AUM, and years in service. See your projected revenue in 5 years. Learn your potential income projection as an independent.

Doing the hard work to completely research your choices now ensures the patience and care you use to leave your current firm is worth it. Change is good, but never easy. Bear in mind that the manner in which you make this transition gives your new firm an indication of how you may handle a future exit there. Show them you wrote the book on taking the book, with class.

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