This 2-part process will help you gain clarity on the depth of your client relationships and the portability of your assets—ultimately helping to ensure any move is a successful one.

Whenever an advisor contemplates a move – regardless of the destination being a wirehouse, boutique, regional or independence – it’s important to assess the portability of the business. That is, identifying if the assets can be moved, and whether or not your clients will follow. Only when you have worked through this thought process can you really determine if a move makes sense.

The good news for advisors is that it has become far more common for clients to develop long-standing relationships with their advisors, and not the firm that they represent. We have found that in most cases, 80% or more of an advisor’s clients (that is, those clients they want to retain) typically follow in a move. There are always a few surprises—that is, there may be some clients you expect to move with you but do not (at least not right away), and others you expect to stay behind but actually follow you. In any case, the better prepared you are, the more likely you will be able to limit such surprises.

The Assessment Process

Assessing the portability of a business is a two-part process. Part one is objective and straightforward, addressing how the assets – the underlying investments and holdings – will map over to another platform. Part two is more subjective, requiring that an advisor look honestly at his clients and the relationship they share to understand if there are reasons that would prevent them from following him to a new home.

Part one: How easily will my book move?

The question of how an advisor’s book will map over to another firm is easily answered by doing a side-by-side comparison of products, managers and funds to determine where they match up and where there may be gaps. These 6 questions serve as a guide for your analysis:

1. Identify assets that are in proprietary products or that can’t move due to lock-ups: Look for things like alternative investments.
2. Review credit and lending business: Can rates and terms of outstanding loans be matched or even bettered by making a change?
3. Analyze third-party manager and fund relationships: Are they on another firm’s platform? If not, can they be added or otherwise accessed? As no two platforms will ever be identical, it will be necessary to understand the process for adding a needed third-party provider to the new platform (or perhaps entering into a dual contract where allowed).
4. Where an alternative must be found, assess the impact on clients: Does the change trigger unfavorable tax consequences? Are there other potentially negative implications to moving clients from one investment into another?
5. Determine how much flexibility a prospective new firm has to accommodate your business: Is the new firm willing to make exceptions that facilitate a more seamless transition of the business?
6. Where certain assets cannot be moved: How comfortable are you leaving them behind?
   What is the financial impact on you if that happens? Could jettisoning some assets jeopardize the entire client relationship, or would you and the client be comfortable that certain assets cannot follow immediately?

A detailed breakdown of revenue and assets by product (without confidential client information) can also be provided to a prospective new firm, allowing their product specialists to perform their own review.

Part two: Will my clients follow?

The question of whether a client will follow is more subjective and harder to predict with certainty. The following can guide you as think about your relationships:

1. What is the genesis of the client relationship? Did you introduce the client to your firm or did you inherit the relationship along with a longstanding prior history with your firm?
2. Are you the client’s sole or main point of contact? Do they identify with you or are they serviced by multiple people?
3. What is the length and nature of the client relationship? What is the depth and breadth of your work with a client? Do you provide holistic, all-encompassing guidance or are you relied upon strictly for investment management?
4. Did you move before, and if so, how recently? In a previous move, did they express any concern or dissatisfaction?
5. Thinking about the move from a client’s perspective, what’s in it for them? Will fees and the scope of services be replicated or even improved?

Every advisor, tenure or level of success aside, wrestles with this at some point in the due diligence process. For some it may be a momentary pause, then they’re quickly reminded of the strength of their client relationships, as well as their ability to replicate and improve upon their business model and client experience. For others, it’s even more important to go through this exercise in advance of a move as it allows advisors to identify if any challenges exist, quantify the impact on a potential move, and look for necessary solutions.

While it can be daunting to think about uprooting your clients, let alone yourself, thoughtful preparation is the key. Taking the time to understand both the depth of your relationships with your clients and the transferability of your assets are important steps towards ensuring that any move will be a successful one.