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Industry Spotlight > Advisors

7 No-Nos When Switching Firms

By Mark Elzweig

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What You Need to Know

  • Most advisors in your branch are competitors, not friends, and should not be privy to any of your plans
  • If you’re leaving a non-protocol firm, you’ll need to be especially diligent in following instructions from the prospective firm.
  • For the first two months after switching firms, it's imperative you prioritize work on moving your business over.

Moving to a new firm can be a perilous undertaking without the proper preparation and execution. Employee advisors have to be especially mindful of branch managers and advisors at their old firm who will try and thwart their move. 

Here are seven blunders that could make your move extremely dicey.

1. Discussing Your Upcoming Move With Other Advisors

The famous World War II admonition “Loose lips sink ships” applies here. The consequences of loose, unguarded talk can be calamitous.

Most advisors in your branch are competitors and not friends. You’ll want to be sure that your branch manager and other advisors do not have any advance knowledge about your move. They should be astonished when you resign. Otherwise, you’re giving them pretext to fire you or a head start in planning how to prospect your book.

2. Failing to Play by the Rules

You’ll need to have in-depth conversations with the prospective firm’s legal department. Talking to clients in advance about your move or taking confidential non-public information like Social Security numbers or account holdings are big no-nos. 

Those missteps can trigger temporary restraining orders, even in an exit from one of the firms that’s part of the Protocol for Broker Recruiting. If you’re leaving a non-protocol firm, you’ll need to be especially diligent in following instructions from the prospective firm. Firms differ in what they want you to do to avoid soliciting accounts. It may also be advisable to hire your own attorney. 

3. Being Clueless About the Transfer Process

Multiple calls or meetings with the transition team are a must before your resignation. You’ll need to familiarize yourself with the transfer process and understand how each stage of the process works. 

Carefully study the prospective firm’s account opening forms. Do you know exactly what information you’ll need to open an account? Can you monitor what stage of the process the new account is in and do you know what needs to happen next?

4. Taking Your Eye Off the Ball

I once worked with an independent advisor who was strangely unfocused throughout the transition process. He was erratic and lackadaisical about calling clients due to a sense of overconfidence in the strength of his relationships. 

He also failed to convey a sense of urgency during the account transfer process. He was the holder of two master’s degrees and got lost in all kinds of extraneous details. Not surprisingly, he lost many of his assets during the transition.

It’s imperative that after switching firms you prioritize work on moving your business over to your new affiliation. This is your paramount responsibility for at least the first two months. 

5. Not Staying in Front of Clients Prior to Your Move

The most successful advisors with whom I’ve worked spent a lot of time bolstering their client relationships prior to their move. They did client reviews and had lots of meetings and calls with their clients. 

In a subtle manner, they reinforced their position as indispensable, trusted advisors. They were the choreographers of the optimal investment and financial planning programs for their clients.

Once they moved elsewhere, they had no problems signing up their key investor clients at their new firm.

6. Lacking Clarity on the Reasons to Move

You must be able to offer clients a succinct rationale for why your move is best for them. This can involve a superior investment platform or your increased access to key department heads at the new firm.

I’ve placed a number of advisors out of one major wirehouse that pushes securities-based lending. These advisors explained to clients that they would have more freedom to service accounts properly at their new company, which really resonated with these investors. 

7. Dumping In-house Products in Advance of Your Move

Every so often, I hear about advisors who close out credit lines or jettison proprietary products in advance of their move. They are inadvertently telegraphing their intentions to branch management, which can end badly.

(Image: Hvostik/Shutterstock)

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