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‘Perfection’ Can Be the Enemy of A Successful Advisor Transition

It is simply unrealistic and counter-productive to assume there will be no hiccups of any kind when transitioning hundreds, if not thousands, of accounts in a short amount of time.

As with most things in life, the success of an advisor transition is often dependent on the mindset of the advisors and staff moving their book of business from one firm to the next.  We have worked with many transitioning advisors, either setting up their own RIA or moving from one firm to another, and those that have struggled the most have gone into the transition expecting things to run at break-neck speed with laser-like precision and have assumed the disruption to their business would only last “two or three weeks.”  Regardless of the amount of planning and preparation a team does prior to their resignation from their current firm, even the most successful transitions will see the phones not work exactly right, the copier/scanner will die at some point during the transition, the advisors will forget a certain form or a ninth account number within a certain household’s documentation, etc.  One of my best friends at one of the major custodians always advises transitioning teams as they embark on this journey, “This is going to be a huge success, but just understand, there will be tears.  Mark my words … there will be tears.”

Many football teams script the first 10, 15 or even 20 plays of the game.  The goal, of course, is for all 20 plays to go smoothly, the team to go up 10-0 right out of the gate and to never look back on their way to ultimate victory. In reality, the quarterback needs to have the option to call an audible if and when the defense doesn’t line up as expected; the players and coaching staff need to be strong-minded enough to not get rattled when there are fumbles, interceptions and/or bad calls by the refs; and they all need to be prepared for the opposing team to wrestle the momentum away at some point in the game and go on a successful run of their own.  Transitioning a book of business that took a team of advisors years (if not decades) to build, all in a matter of weeks, is a monumental task. It is a task that requires the proper expectations and mindset going in. As martial arts master and philosopher Bruce Lee wrote, “If you cannot be pliable in your thinking or your response to a situation, then you have limited your options for success, for growth and for joy.”

One advisor broke down crying 48 hours after he resigned from his former firm. Despite my repeated objections to his line of thinking, he was convinced that his former branch manager was his best friend (they played golf together every weekend, they traveled together with their wives and families, etc.) and therefore no one from his former firm would be calling his clients and asking them to keep their assets with the firm. Not only did every client receive a call, but some advisors took liberties with the stories they were telling clients, implying the advisor had been fired, possibly due to some compliance violations. We had to urge the advisor to stay focused, stay positive and to keep calling clients and stick to our original plan. In the end, every client he invited to join his new firm ultimately transitioned, but had he curled up into the fetal position and allowed this unexpected turn of events to derail his strategy, things may have turned out differently.

The lead advisor for the team we most recently transitioned had the perfect attitude going into the launch of his new RIA—he told his team, “We are going to work like hell for four weeks getting client signatures, then we are going to spend the next three weeks cleaning things up—we are ultimately going to miss some of the beneficiaries on the retirement accounts; we are going to miss some of the feature forms on certain accounts (standing letters of instruction, options approval forms, checkwriting forms, etc.); the former firm may change some of the client account numbers, which will ultimately cause some transfers to reject; we have to be prepared for all of this, and just know it’s simply part of the process.” 

Other advisors wrongly tell their teams the night before the transition process begins, “We’re going to move the assets in less than three weeks and at the same time, we cannot reach out to clients more than once … We have to get everything right the first time—if it’s a business account, get the articles of incorporation, if it’s a retirement account, get the beneficiary information, if the forms need to be notarized, be sure that gets done, but do it all in record time, with absolutely no mistakes!” Whenever I hear this type of unrealistic instruction, I stand up and quote heavyweight champion (and amateur philosopher) Mike Tyson, who said, “Everyone has a plan until they get punched in the mouth!” 

It is simply unrealistic and counter-productive to assume there will be no hiccups of any kind when transitioning hundreds, if not thousands, of accounts in a short amount of time. The team will be working long hours, seven days a week, for several weeks—fatigue will set in, nerves will be frayed, and yes, there most likely will be tears. Advisors leading the most successful transitions will remind their teams (and themselves) that this is all part of the process and won’t allow a fumble or turnover to derail the team’s momentum and won’t let the team lose sight of their goal, which is to transition clients to a better platform that can ultimately serve them better.  With the end goal fresh in everyone’s mind, asking a client to sign an extra document or a making a late-night run to FedEx because the office copier ran out of ink, isn’t the end of the world, it’s merely a stepping stone on the way to a better business model that advisors and clients have been dreaming about for years.


Matt Sonnen is founder and CEO of PFI Advisors, as well as the creator of the digital consulting platform, The COO Society, which educates RIA owners and operations professionals how to build more impactful and profitable enterprises. He is also the host of the popular COO Roundtable podcast.  Follow him on Twitter at @mattsonnen_pfi

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