In 2011, advisor Michael Andersen wanted a change.

So over the course of a year, he and partner Darren Midgley began shopping for a new home for their book of 250 clients.

The pair, based in Mississauga, Ont., spent hours eating in high-end Bay Street restaurants, sampling expensive wine and listening to slick sales pitches from other large firms.

But they finally clicked with a suitor at an ordinary coffee shop, during a meeting with Richardson GMP’s chief executive and his team.

“They asked a lot of questions about us,” recalls Andersen. His first impression: “Everyone’s so normal. I just wanted to work with normal people who were trying really hard.”

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Maglan Naidoo, an Edmonton advisor, was also looking for something new, and joined Canaccord Wealth Management about two years ago. He’d built up a $32-million book of business at two large institutions, but decided to jump to Canaccord because he’d grown frustrated with pressure to move proprietary investment products. “I was pretty unhappy.”

Since the switch, his practice has grown to $52 million. “It’s been the best move I’ve made so far,” he says, attributing much of the growth to being able to offer new investment vehicles and money managers.

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Other advisors yearn for the freedom to take positions in alternative investment vehicles, such as private-equity deals or private REITs.

Adam Woodward, a Calgary-based Macquarie Private Wealth advisor, made his move to better tap into private-equity deal flows and financing.

But such changes are by no means risk-free: clients don’t always follow their advisors, especially if they have other ties to the institution.

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In fact, switching is a lengthy process that requires an extensive due diligence process, advance planning, and then a highly focused effort to bring clients along for the ride.

Advance preparation

Some firms tell advisors to expect to lose up to half of their asset bases when they pull stakes. But while you’re looking, you’re not allowed to tip off clients.

Instead, shore up relationships in advance of a change. Before he’d made up his mind about the move, Andersen asked clients to complete customer satisfaction surveys to get a sense for what was and wasn’t working within his practice.

That’s important, because switching firms gives clients “an opportunity to revisit you,” he adds. What’s more, after an advisor leaves, the previous firm will notify clients by letter, phone and email to try to persuade them to stay. So make sure you’ve got good reasons for clients to follow you.

Toronto advisor Wynn Harvey, a Macquarie vice-president who joined the firm last year, says her team gave clients advance notice that a change might be in the cards, and then sounded them out for feedback.

Pulling the trigger

The actual moment of transition requires detailed planning and rapid execution:

“We arrived late Friday afternoon, and our licences were switched from our previous firm to the new firm by the end of the day,” recalls Harvey.

“Once that happens, you’re allowed to solicit your clients. We had prepared an email to go to all clients about our move, which went out that Friday night. On Saturday, Sunday and Monday, my business partner Bruce Moffatt and I contacted all clients by phone.”

Andersen says most clients asked three questions during those calls:

  1. Why did he move?
  2. What’s in it for them?
  3. What’s the upside for you?

To answer, he prepared a script outlining his key reasons and memorized it before making the calls.

He addressed the slightly improved commission structure, and the thorny issue of potential risk to their investments; and pointed out the new firm’s $1-million portfolio insurance coverage as well as the federal protection plan. “We just pounded that same message over and over,” he says. “It’s difficult to think of something new to say to every single person.”

In Naidoo’s case, he told people the change to a full-service brokerage meant he could access a wider range of investments, technology solutions and equity research to help build portfolios.

Hitting the ground running

The transition process takes anywhere from a few weeks to a year, depending on the size of the client base.

But the first 30 days, says Richardson GMP president and CEO Andrew Marsh, “is the sprint phase”—the period when the advisor and the former institution are working to retain clients.

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Andersen and Midgley emailed clients as soon as possible, and then focused on ensuring their new website was up and running within the first few days. That was followed by a letter of introduction and materials about the new firm, including an information package outlining its range of services, and profiles of senior executives.

After that initial round of contacts, they began sending out weekly email newsletters with more information about the new firm to build familiarity.

They recently also conducted an open house at their new firm to allow stragglers—and existing clients—the opportunity to see the place and meet the CEO and chief equity strategist.

Logistics

The paperwork process can last for up to six months as advisors collect signatures for the forms required by regulators to shift portfolios to the new firm.

Woodward had to transfer more than 1,000 accounts, and made certain before committing to the switch that he’d have timely back-office and IT support to expedite paperwork processing.

Then there are the mechanical elements to ensure seamless transition: office space, phone lines and the like.

“You hear stories of advisors who’ve moved and two weeks after arriving still don’t have a working email account,” says Earl Evans, who stepped in to head Macquarie’s Private Wealth Management group three years ago.

Marsh, meanwhile, assigns a transition team to new advisors to handle everything from documentation to training and marketing support.

Rethinking your client profile

Harvey points out a move may also represent an opportunity to part ways with clients who don’t fit with the direction of your practice.

In some cases, advisors may be looking to recruit wealthier clients or diversify into alternative investment categories that don’t match with some people’s risk profiles or comfort levels.

“You need to make sure you bring the clients you want and who have the ability to grow with you,” she says. “After we left, we emailed our prior firm with the clients we wanted them to contact to retain there for servicing.”

Follow-up

While most clients who are prepared to make the switch with you will do so within a month or two, Marsh points out others will come around more slowly.

Some take as long as a year to make up their minds or discover they are not satisfied with the new advisor who’s been assigned to their portfolios. That could mean maintaining ongoing correspondence for more than a year.

But, while it can be drawn out, Harvey says her team made those assessments much faster.

She contacted clients who’d been wavering or had failed to make the move, but cut off further attempts after about three months.

Stay cool

Amid all the upheaval, advisors may find they don’t have much time for regular business. Indeed, Andersen is using his switching bonus as transitional income until the changeover is complete.

“Generally,” says Harvey, “you negotiate a transition package with the firm that you’re moving to with the expectation of a shortfall in revenue in the first six months to a year.”

She adds, “[During] our previous move, it took about 18 months to exceed where our revenues were prior to leaving.”

Woodward, meanwhile, suggests putting aside the equivalent of two pay cycles because advisors during this transition period will be doing a lot of travelling to talk to old clients.

John Lorinc is a Toronto-based financial writer.