Create a transition plan
Grau recommends stretching out the transition associated with the acquisition, such that the outgoing advisor stays involved with the firm even after the sale. “It communicates that you and the outgoing advisor are engaged in a true exit strategy, one that prioritizes clients’ well-being,” he explains. Remaining with the firm through the transition is an endorsement from the outgoing advisor, signaling his or her trust in you and a commitment to help the business—and clients— succeed after he or she is gone. Outside of its symbolic significance, the presence of the previous advisor provides a source of support throughout the transition process. Consider signing a consulting agreement to accompany the sale document so everyone is clear on their responsibilities during the move. It gives you both something to refer to in case an issue arises, and it provides an outline on which to build your transition strategy.
Retain key employees
Advisors tend to focus on clients and the revenue-generating potential of the accounts they’re buying when they weigh an acquisition—rarely do they consider staff. But key staff are likely to have existing relationships with your new clients, and getting them on board can increase retention rates and ultimately help secure the loyalty of those new clients. While a seller won’t remain with your practice for the long term, staff members have the potential to become long-term hires and could be positive contributors to the business you’re building.
That said, it’s critical to have those conversations with staff before a sale closes. An associate advisor might decide to go it alone rather than join you, taking their accounts with them and decreasing the value of the book you acquired. You could negotiate a non-compete agreement with those advisors as part of the acquisition if they aren’t willing to stay.
Create a communications strategy
Effectively communicating with clients around the transition is an essential part of any successful acquisition. How will you and the previous advisor notify the different strata of clients in the new book? A phone call announcing the change could suffice for smaller accounts, but you might ask the outgoing advisor to personally introduce you to their most valued, high-touch clients. The two of you can hold joint meetings with the clients of that group, outlining your experience and expertise and addressing any concerns they might have about the move. Be mindful in those introductions to describe the new value you’ll bring to the advisor-client relationship without demeaning or questioning the work of the previous advisor. One option: You could frame this transition as an opportunity to try a different approach to wealth management that builds on the work they’ve already done and has the potential to enhance their experience.
Gather all information available
In addition to transferring investment accounts and migrating data to your CRM, managing an influx of new clients also involves reviewing each portfolio. In some cases, clients may be invested in products and strategies that aren’t part of your management approach. While you’re not required to start using those tools across your practice, it is critical to understand why they were chosen for these particular clients and how they work. That way you can provide those clients with continuity in their planning. It’s also important to ask an outgoing advisor if they have records of clients’ key personal information—from children’s names to hobbies—if those are not included in the files. There will naturally be a relationship gap to bridge when you bring new clients on board, but having access to such details can help you build an immediate rapport and ultimately make more thoughtful and informed recommendations.
Don’t forget about existing clients
One mistake advisors often make in bringing on a large group of new clients is neglecting the ones they already have. You can avoid this by blocking out time to connect with your existing client base throughout the transition. This step might require additional resources, so you may need to hire supplemental staff and associates to manage both your new and old accounts—even if you gain new staff through the acquisition. Be aware that some of your clients may not see the benefits of this acquisition and may be unsettled by the transition. Be proactive with your communication to your existing client base, and explain that the acquisition won’t change the service they receive. Frame the practice’s growth—and the development and expansion of your resources to manage that growth—as something that will ultimately benefit their own planning needs.
Identify and address knowledge gaps
Ideally, you are targeting a firm whose investment philosophy, management style and client base are a good fit for your existing practice. Even so, there are bound to be gaps in your team’s knowledge and service model that could negatively impact the services delivered to the newly acquired clients. Part of your work with the previous advisor should include going through their book to identify those gaps and devise strategies to address them. That could mean asking the advisor to broker introductions with their own external partners, such as attorneys and CPAs, who can either provide guidance themselves or point you to other resources who can support your planning efforts.
Clients might anticipate a period of adjustment when joining your firm, but continuity is key to a successful acquisition. The smoother you can make that transition, the better chance you have of maintaining as many of those relationships as possible.