After fifteen years in the business, Gary knew something had to change. Like many of his colleagues, he started out working hard and building his client base with pretty much anyone he could get. The income was excellent, but the working hours were excessive. But, he’d recently started receiving complaints from top clients questioning his ability to offer the level of advice and service they expected.

This was a definite call to action. Gary realized he’d have to review his client segmentation and cull the lower, less-profitable end of his book. While he had done this a few times in the past, somehow it seemed more difficult now. The clients he was considering passing off were some of his oldest and most loyal—or were related to or referred by that same group. These were the people who’d initially helped him get started and had stuck with him through thick and thin. It seemed unfaithful to pass them off simply because they no longer fit his ideal-client profile.

Despite misgivings, he carved out the groups of clients he wished to keep. The first—about 30% of the families on his client list—was composed of 55- to 70-year-old professionals with invested assets over $500,000. The second—another 20% to 30% of his clients— were close friends, relatives or referrals of his key COIs and clients. The remaining clients were either highly aggravating to deal with, or no longer sufficiently profitable.

A few simple steps can help a transfer go better:

› Mentor a member of your own practice to become qualified at a basic level.
› Have the junior advisor identify his or her ideal-client profile.
› Identify clients who fit your own idealclient profile (the ones you’ll keep).
› Determine which of the remaining group would best suit the junior advisor.
› Negotiate compensation and possible future ownership.
› Have the junior advisor develop a business plan.
› Survey the client base about whether they would accept a junior advisor.
› Design a marketing strategy directed at this group when introducing the new advisor.
› Start with joint client meetings, and then let junior take over.

Rather than sell this third group to an external advisor, he looked for a more sensitive way to handle this transfer. That’s when he thought of Sarah Behr. For the last three years he’d been mentoring the loyal and promising licensed assistant, and she’d recently completed her CFP courses. Through her work with him over the past few years, she’d become schooled in his philosophies and approaches to financial planning and had been producing all his financial plans and investment proposals. She had begun persistently expressing desire to become a sub-advisor and follow in his footsteps, adding she’d be happy to start on a salary basis, but over five to eight years, would want the opportunity to buy in to the practice.

Gary saw some distinct advantages to promoting from within the ranks. His clients were already familiar with Sarah, albeit in an assistant’s role. A personally trained assistant in the junior advisor role would allow him to maintain an image of longevity by providing continuity of service and company identity.

Besides, the pace of the transition could be controlled internally, and Gary could remain as involved as needed. And finally, he and Sarah could enjoy more flexibility with financial terms than would be common in an external sale.

So a new assistant was engaged to cover Sarah’s former duties and help fill the gaps in the firm’s current service delivery. Sarah began to join Gary in meetings with the targeted clients. At each meeting, Sarah was given specific topics or agenda items to prepare and present in order to highlight her skills and help build trust with clients. Gary and Sarah routinely debriefed after these meetings to determine whether they had been successful. Gary was able to make suggestions on better approaches to various discussions, such as recognising cues from client body language, buying signals, noticing client discomfort, and handling emotional issues and rejection.

Over the summer, Gary conducted a client survey. One of the questions dealt with the client’s comfort in dealing with a junior advisor, and the bulk of the feedback looked positive. It appeared clients were willing to accept another advisor, assuming he or she was qualified. Nevertheless, Sarah discovered early on that some of Gary’s clients were uncomfortable meeting with her to discuss finances. They liked her, but had grown to know her as the assistant, which made it difficult for them to now accept her as their advisor. Part of this was a reluctance to accept change or let go of Gary, but there was also hesitation to embrace someone with a perceived lack of experience and a different style. For some clients, gender also was a barrier.

Gary and Sarah re-examined whether they’d done a sufficient job of selling the benefits of the changes to clients, or if this transition truly was a good idea. Gary worked with Sarah to help her determine her own initial ideal-client profile, which was set at families with $100,000 to $500,000 in invested assets. Those that failed to make the list were further reviewed to determine if they were in some way related or associated with client families being retained by Gary. If not, they would be sold to another advisor or moved to a dealer house account.

Then came the job of selling the associate as advisor. For Gary’s clients to feel comfortable with Sarah, they would have to perceive her as having professional credibility, maintaining strategies, values and processes consistent with what they’d experienced with Gary. The clients ultimately would have to learn to trust Sarah with Gary’s help. As no two people can be identical in their styles and personalities, clients would also have to learn to accept Sarah’s fresh perspective, personal style and motivation.

Gary has always believed and advocated the values of balanced cash flow and net worth, saving for the future, a long-term approach to investments, proper risk management, and the importance of a comprehensive financial plan. So has Sarah. Therefore their future marketing must emphasize how she not only shares these values but also practises them in her own work.

Sheila Munch, an Oshawa-based fi- nancial planner with Assante Financial Management Ltd. who has been mentoring two advisors, counsels, “the most important detail in choosing a junior advisor is that you find somebody who shares your moral compass.”

While Sarah does not have the years of experience Gary has, she has been fully immersed in the culture and values of his practice. Their marketing plan should emphasize her modern approach and youthful efficiency, while at the same time highlighting her absolute dedication to Gary’s time-honoured financial planning approach and his continued guidance in the background. As each client is delegated, Gary should ensure that he or she is a good fit for Sarah. Increasingly she should be handling client meetings on her own.

Not surprisingly, Sarah and Gary have different styles of interaction with clients. While Gary has a top-down simpli- fied approach to client issues, Sarah is more academic and conciliatory. While there’s nothing wrong with either approach, some clients might not adapt readily to Sarah’s style. In that case, they could be either retained by Gary or sold to another advisor with a similar style. At the same time, Gary should be referring new clients who he believes would prefer Sarah’s style over his.

Munch, who has two junior advisors with complementary personalities, one male and one female, says, “My clients are used to a female advisor, so it’s important for me to have that option available in my junior advisor team.”

“It takes time to build credibility,” says financial planner Teresa Black Hughes of Solguard Advisors/Peak Securities in West Vancouver. “Even for someone who has the built-in credibility of an economics degree, it will take a couple of years to build confidence and credibility with clients.”

One way to speed up the process would be for Sarah to build a public pro- file as an expert. This could be achieved by writing a short monthly column in a local newspaper on financial planning topics. These can be copied by the administrative staff and mailed to the target client list. Further, Gary can refer any media calls he receives to Sarah, so that she gets all the available press coverage. Prospects respond differently if they’ve already read about an advisor.

As Sarah begins to create solutions for clients she should also ask for testimonials that can be used in her promotional materials and Web profile. For particularly clever or emotional cases, she could ask the client if his situation and the solution she offered could be paraphrased in a client letter to be reviewed by others in similar situations. This can have a huge impact, and help spread stories about the breadth and credibility of Sarah’s services and expertise.

Specialty or Strength
The client group Sarah is servicing has a few things in common beyond invested assets and age range. Many are younger, long-term clients in the accumulation phase of investing. They’re the sandwich generation—struggling to raise children while trying to deal with aging parents.

To capture their loyalty, Sarah needs to drill down into their everyday-life issues. From a financial planning perspective that means RESPs and RRSPs; taxplanning; life, disability and critical illness insurance; long-term care insurance for their parents; and estate planning issues. She needs to learn about the problems and issues these clients face when dealing with parents, such as housing solutions, government programs for seniors, tax deductions and credits, and senior’s recreation. And, she should explore post-secondary and graduate programs and grants, or career counselling services for young adults, and maybe offer them a course in financial planning, or participate as a financial expert in a marriage preparation program.

All these services will serve to raise her particular value as a consultant with her clients and help distinguish her value from Gary’s.

As the process evolves, Gary should check with Sarah’s clients to ensure they’re happy, and to further support her work. It could be as simple as dropping into Sarah’s meeting to say hello or make friendly survey calls to these clients and ask them how satisfied they are with the service level.

In Gary and Sarah’s case, clients reported they liked working with Sarah but were glad she had the support of a senior advisor. They also disclosed they’d previously been worried about becoming too insignificant for Gary, but now felt they were receiving more effi- cient service with Sarah at the helm.

As it turns out, it took two full years to transition all the clients on the target list and begin benefitting from the effort. With more time on his hands to focus on his best clients, Gary was able to boost his personal production by 30%. Although the mentoring initially added to his workload, the increased production made it worthwhile. Last fall he accepted an award at his dealer conference for top AUM growth.

The bottom line was a win for all involved— the clients, Sarah and Gary. The clients are now serviced by advisors with whom they’re well matched in terms of experience and expertise. And Gary and Sarah both have more reasonable workloads and are able to improve service because they’re working with clients they consider ideal.

Originally published in Advisor's Edge