How Advisors Can Keep More Clients When Changing Firms

Transitions are always hard, and financial advisors don’t get a pass on the pain. 

They can lose nearly a quarter of their managed assets when switching firms, a recent Cerulli report showed. Awareness of that risk is evident in the period after they announce their departure, a time one advisor described as a “fire drill” that’s typically crammed with meetings and phone calls as they work to retain as much of their books as possible. “Four years ago, my team worked 12 hours a day, 21 days straight, myself included,” said Monish Verma, who broke away from UBS to start his own firm in 2021. Moves can also be complicated by the logistics of porting client accounts and changing tech stacks.

The numbers in the Cerulli report highlight the importance of careful preparation and communication plans, especially as such transitions increase. “None of these clients are aware that the advisor is going to move until they actually move,” said Thomas New, president of Verdence Capital Advisors. “It’s a bit jarring to a client to pick up the phone and be like, ‘Wait a second, you’re moving?’ You have to be sure that … clients deem you an irreplaceable part of their financial well-being.”

Lost in Transition

Advisor moves encompassing everything from breakaways to succession plans are expected to continue at a breakneck pace, with more than a third of advisors set to retire over the next decade, according to the Cerulli report. Advisors moving between broker-dealers lose roughly 22% of client assets, and a similar study from 2021 showed losses of about a fifth across the industry as a whole. Clients have a variety of reasons for not following advisors, including the desire to avoid having to learn new systems and pressure from the current firm to remain where they are. “Too often, it seems chaotic and disorganized,” New said. “Right out of the gate, if the client feels, ‘Hey, this is a little too much for me to handle,’ they’re likely to stay put.” That effect is particularly pronounced with wirehouses, where institutional norms and trusted brands can help firms retain clients.

The Cerulli report also found that:

• Advisors moving from a broker-dealer to an independent firm lost, on average, about 18% of their assets.
• Advisors moving between independent firms lost only about 11% of their assets.

While many of Verma’s clients were “comfortable” with his move from UBS, some 10% to 15% were more cautious. One didn’t follow Verma because he was upset over not being told in advance, even though compliance rules prevented Verma from doing so.

To Plan or Not to Plan. Two things that can make transitions difficult are a lack of proper planning and a tech stack that is controlled by, or the intellectual property of, the firm, said Neil Albritton, whose family business recently joined the hybrid RIA Integrated Partners. “Obviously transitions can come with a lot of paperwork and a lot of hoops to jump through,” Albritton said. “Whatever the advisor can do to take on more of that role internally … it just makes the transition work so much better.”