A tidal wave of change is coming to the world of wealth management. In the next decade, one-third of RIAs are expected to retire. These 111,500 advisors represent more than a third of all client assets under management.
For clients with a retiring advisor, this means they will either transition to a new advisor in the same firm or view the transition as an opportunity to find someone new. This spells either opportunity or disaster for wealth management firms.
According to one survey, 22% of advisors set to retire do not have a clear succession plan. Wealth management firms should start now to establish best practices for these transitions to maintain positive client relationships, reduce attrition, and set up new advisors for success.
Understand Client Pain Points with Transitions
Because clients work with the same financial advisor over many years, sharing personal information and aspirations, they understandably can become attached to someone they trust. Learning that their long-time advisors are retiring or otherwise leaving their firm may cause clients some anxiety. So what can wealth managers do to give clients confidence during this transition?
At the top of the to-do list is to begin the transition early and reach out to clients often. Clients who have longevity won’t want to feel jilted by a senior advisor leaving and transitioning their wealth to a junior advisor they don’t know or who they don’t see as experienced.
New advisors should get to know clients well and address pain points early on. This gives the advisor a chance to learn what clients liked and didn’t like about their relationships with their previous financial advisors. RIAs can frame the transition as a chance to level-set and improve upon clients’ prior experiences. Younger advisors can bring a fresh perspective to a portfolio and quickly demonstrate their value.
When financial advisors begin the transition process early, they have the opportunity to make sure that each client meets with the right advisor for them. Advisors should consider with whom their clients will work best at the firm. The earlier advisors start the process, the more co-meetings they can hold with new advisors to gauge their fit with clients.
How RIAs Can Simplify the Transition
As necessary as it is to ease the transition for clients, good practices can also simplify the transition for advisors. Conventional wisdom suggests a three- to six-month process for moving clients to a new advisor’s book of business.
Having an up-to-date CRM is invaluable to ensure a smooth transfer. RIAs should keep copious notes that include data and client preferences. Advisors should go beyond core information to include any relevant communications.
A comprehensive platform that manages the entire customer lifecycle is the lifeblood of any wealth management firm. It helps financial advisors avoid compliance issues that can plague client transitions to new books of business. Secure document storage reduces paperwork, NIGO rates, and redundancies. Additionally, a document management system makes compliance and audit processes simple and nearly painless.
Make It a Team Effort
Before and during the transition, a wealth management firm must build a strong transition team to prevent client attrition. One wealth management firm reported losing up to 60% of client assets when an advisor left. A smooth transition to a new advisor can keep assets at a firm even when an advisor retires.
New advisors can work together with exiting advisors to understand what worked well for them. The exiting advisor can smooth the transition by introducing the new advisor to their clients. They can give a comprehensive picture of a client’s history, including what challenges they’ve overcome and specific ways they have added value for the client.
By always working as a team to serve clients, a wealth management firm can ensure clients and advisors feel supported during a transition. This way, clients know that their financial success is not dependent on one person. It also enables junior advisors to form bonds with clients and build their trust.
Leverage the Experts at Docupace
Due to SEC/FINRA regulations, the acquiring firm cannot have access to client information until the new affiliation is complete. Moving clients to the new provider requires all clients to complete new account paperwork or “repaper” — traditionally a very labor-intensive process. However, the Docupace Advisor Transitions Program is designed to help transitioning advisors “re-paper” all client accounts, at one time, as they are transitioning from one provider to another to another. Experienced transition specialist use a proprietary digital process that quickly pre-populates all new account paperwork and significantly reduces NIGOs.
- All new account forms are pre-filled and ready to sign before the U4 drop date
- All lines of business are covered
- All documents are stored in a secure and compliant cloud-based vault
- Expert assistance is available to the advisor throughout the process
About Docupace
Docupace is a solutions provider focused on digitizing and automating operations in the financial advice and investment industry. Financial services firms use the Docupace Platform (a cloud-based, integrated software suite) to reduce back-office expenses, improve efficiency, strengthen recruiting, and enhance the experience of advisors and investors. With headquarters in Los Angeles, California, Docupace is proud to serve some of the largest independent broker-dealers and registered investment advisers (RIAs) in the financial services industry. For more information, please visit www.docupace.com.
