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important thing is culture, he says. For example, find out if a potential firm supports entrepreneurs: Will clients be considered yours or the firm’s? Will you be in charge of your own succession? Does the firm push products?
When Gotts and Sweeney were thinking about switching, they interviewed several bank-owned firms and independ- ents, and talked to advisors at these firms. The due diligence helped them realize they preferred an independent.
“We wanted to keep our practice impartial,” Gotts says. They also based their decision on available support, technology and research.
Sometimes, the cultural fit might be wrong for clients. Noah Billick, general counsel and portfolio manager at Dorchester Wealth Management in Montreal, gives the example of an advisor transferring from an Investment Industry Regulatory Organization of Canada (IIROC) firm to an investment counsel firm, like his. Even if an advisor were eager to change business models to align with the firm, clients might not like the change, he says.
While culture is important, so are a firm’s practical offer- ings. John Novachis, executive vice-president at Investment Planning Counsel in Toronto, says an advisor should consider a change only if the new firm can demonstrably improve
the advisor’s business, through services such as automated onboarding or client portals.
In that vein, Mahrt says he assessed 10 firms for
Switching can be a time to successfully streamline your book, as you take the opportunity to clean house and drop problem clients, says
Lisa Stam, an employment, labour and contracts lawyer at SpringLaw in Toronto.
professional development
“The hardest thing is to reach the point where you want to leave a home”
everything from infrastructure to compliance to their bal- ance sheets.
He also rated each firm on whether its offerings were right for his clients and team. For example, clients might benefit from better pricing, and the team might benefit from better back-office support.
Will clients follow?
While a move might seem right, advisors must estimate how many clients will transfer with them to the new firm before making a final decision. Advisors are prohibited from soliciting their clients to join them until they’ve announced the move (more on this later).
Raftus says that, when advisors have a record of pro- viding value, clients typically follow them. While most cli- ents follow new advisors to Canaccord within an eight- to 10-week period, he says, clients at a bank, for example, may prefer to stay put.
Better offerings at the new firm will also entice clients. “You’ve got to have a good sense of why you’re making the move and what the value proposition is at the new place” and why it’s better for clients, Billick says.
For O’Hagan, leaving a bank meant leaving some cli- ents behind. Once at the new firm, he explained that it was subject to the same regulated environment as the banks and that clients would have more product choice, but some weren’t comfortable leaving, he says.
Gotts and Sweeney also lost a few clients (roughly 95% switched with them), likely because of ties to the bank, Gotts says. Clients asked about the new firm and its size, and whether investments could be moved in-kind without cost to them. Gotts explained to clients that they’d incur no costs, and that she wanted to be independent and con- tinue to do financial plans and manage investments with- out having to sell bank products.
Long before their move, Gotts and Sweeney laid some groundwork by explaining to clients that their practice was receiving less administrative support.
Mahrt says clients’ key concern was that their invest- ments remained safe. He told clients to imagine a crane picking up their investments at the bank’s vault and placing them in his new firm’s vault. Since the new firm’s custod- ian was National Bank Independent Network, assets were being transferred from one Big Six bank to another.
With that explanation, “it became a non-issue,” Mahrt says. Many clients even told him they were his client, not his previous firm’s. “I felt very honoured and humbled,” he says.
Where a move would be too onerous for elderly clients, Mahrt advised them to stay with the bank-owned firm. Gotts and Sweeney’s move was positive for some of their senior clients because the new office was away from the down- town core, with better parking and accessibility. “We see our clients more now than we ever have,” Sweeney says.
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