It’s common for advisors to choose to “follow the leader” when considering a move—that is, a trusted friend, former manager or colleague who left their firm and blazed a new trail at another firm or broker/dealer, set up their own RIA or joined an established independent firm.
And it certainly makes some sense. No one really wants to go through the hassle of the due diligence process, particularly when someone has done the heavy lift for you. And there’s a certain level of familiarity in going to a firm that a friend is already at and has spoken highly of.
But is it ultimately an easier due diligence process? And is it the right path for you and your business?
“If You Think It’s Great, Then I Should Too”
Virtually every advisor has a “friend” who has made a move. And the most successful ones are often the most vocal in sharing how great everything is at their new firm—with intriguing stories of what sounds much better than where you are now and enticing you to take a few meetings.
It’s a phenomenon we call the “Friend Factor.”
Take Ben, for example. He’s a $300 million wirehouse advisor who always reads about moves in the trades, but none of the stories made him interested enough to poke his head out and get educated. That is, until his closest colleague, Mark, moved to another firm two years ago.
Since then, Mark has been trying to get Ben to join him. He has touted the great service and support he now gets, the transition assistance he received, how much happier his clients are and that he now has more control than ever before to run his business the way he wants to.
Since Ben respects Mark’s thoughts and opinions, he started taking some meetings with the firm. Yet after each meeting, he came away feeling like something wasn’t quite right, but he couldn’t put his finger on what it was.
Ultimately Ben wasn’t seeing the same thing his friend was seeing. But why?
What’s “Perfect” for One May Not Be for Another
The reality is that every advisor’s business, clients and vision for the future look different—and what works for them, may not work for you.
But it’s a point that often gets lost when you’re caught up in the whirlwind of information.
Any due diligence process—even if it’s of a friend’s firm—should start by assessing your own goals first and foremost. For example:
- Am I intrigued by what my friend has shared with me because it’s bright and shiny and new, or because it sounds like something that would fill a gap that exists now?
- What are those gaps that I am trying to fill?
- How much are those gaps impacting my business?
- What are my goals five years from now? Ten years from now?
- Will my current firm allow me to achieve those goals?
Is your friend’s firm right for you? Does it solve for your frustrations and your goals? If yes, then wonderful—continue the due diligence process with them. If not, then it’s time to move on and look for a firm that solves for your own needs and your own path forward. Staying put may be the best option.
Ultimately, while the conversation with Mark had opened Ben’s eyes to the potential for change, it also demonstrated that he didn’t have clarity on what a move might solve for, and whether or not Mark’s firm might actually be a good fit.
For Ben, answering these questions made him realize that he was only attracted to the “bright and shiny” object that Mark’s firm represented—but that things were actually more than “good enough” at his current firm. And that, ultimately, what was right for his friend was not right for him.
A thoughtful due diligence process rooted in clarity around your goals and values is key to a strategic exploration process. Asking yourself the tough questions is just as important when looking at a friend’s firm as it is when looking at any firm—including your current one—and holding each to the same standards is vital.
Speaking with other advisors that have made similar moves is a vital piece of the due diligence process—where you can really hear the successes, the bumps, the pluses and the minuses. But in the end, you always need to make sure that you are staying true to yourself, your business, and your clients.
Allie Brunwasser is a senior consultant at Diamond Consultants based in Morristown, N.J., a nationally recognized search and consulting firm in the financial services industry.