How Often Do The Two Align After An Advisor Signs On The Dotted Line?
By Janeesa Hollingshead
September 10, 2024
https://wealthsolutionsreport.com/2024/09/10/the-promise-of-the-recruiting-pitch-the-reality-of-joining-the-ranks/

For a wealth management enterprise recruiting top talent, reputation in the marketplace and an ability to both differentiate itself and effectively promote its culture and resources are the jumping off points for every conversation with potential recruits. These elements open the discussion door, but aren’t sufficient to seal the deal in an increasingly competitive landscape full of tech bells and whistles, lucrative transition packages and myriad business models.

Building relationships based on mutual interest and shared values is the name of the game in recruiting. Still, for financial advisors in motion and the firms looking to sign them, partnership is more than a matter of alignment – it’s built on expectations born of promises made during the courting phase and a firm’s ability to deliver on them throughout the engagement.

While starting off on the right foot is imperative, maintaining that attentive gait during the onboarding process – and beyond – is just as important. A successful and relatively seamless integration into a new ecosystem is an advisor’s first sense of their new reality. However, there are pitfalls that can damage the relationship in its infancy. What are these obstacles and what best practices can be deployed to avert them?

For every firm that says “we’re great” during the recruiting stage, what is the post-transition reality? To find out, we spoke with four industry leaders with in-the-trenches knowledge of the recruiting landscape and the difference between success and failure within that environment:

-Patrick Farrell, President and Chief Operating Officer at Sound Income Group, a Fort Lauderdale, Florida-based diversified financial services company whose affiliate, Sound Income Strategies, is an RIA
-Louis Diamond, President of Diamond Consultants, a recruiting and consulting firm that helps financial advisors find a fitting home office for their businesses and clients
-Neil Turner, Co-Founder and Co-CEO at NewEdge Advisors, a New Orleans-based RIA
-Lili Kaufmann, Head of Transitions at Sanctuary Wealth, a wealth management platform for advisors

Patrick Farrell, President And Chief Operating Officer, Sound Income Group
Some wealth management firms might say it’s culture and communication that attracts successful financial advisors, but I believe those critical steps are further down the line in the process. What really matters initially is speed. The ability to quickly provide the attention and technology that financial advisors need to seamlessly transition and subsequently grow their business is critical. Firms need to demonstrate they are willing to do the legwork to fully integrate and onboard new advisors fast.

It should not stop once the integration is complete. This is where communication and culture come into play. Firms need to ensure advisors continue to receive support, education and access to technology to allow them to thrive in their new ecosystem.

Louis Diamond, President, Diamond Consultants
Some best practices for getting advisors onboarded include investing extra time before the transition mapping the book to ensure comparability with the new platform, with a special emphasis on lending rates and manager comparability. Additionally, building a dedicated transition team who are experts at understanding the process and can properly set an advisor’s expectations and anticipate issues before they arise is essential. Once advisors join, having key executives check in on progress and ensure the advisor’s needs are met goes a long way since it’s often unexpected and when an advisor is typically the most on edge.

The feeling of “bait and switch,” or an advisor feeling like they were misled, or thinking the firm didn’t do a thorough enough job vetting their practice, is a killer. Every firm says they are great during the dating phase. My job is to recommend firms that we’ve had positive track records with and where advisor feedback is stellar.

In any transition, though, the first few months are challenging, and you are more likely to find an advisor is not as pleased as they will be once they are up and running. (Lack of sleep and stress doesn’t help either!) No matter how well prepared an advisor is, something will go wrong, so both the advisor and firm have to adapt on the fly to changing circumstances.

Neil Turner, Co-Founder And Co-CEO, NewEdge Advisors
At NewEdge, we ensure that we:

-Recruit advisors who will benefit from our services and be a cultural fit for the long term.
-Conduct thorough due diligence that goes beyond the AUM boost. Onboarding and integration will go as expected if both parties understand each other’s objectives. This can mean turning down advisors who may initially appear to be a good fit, but ultimately would be better served by a different firm.
-Create a comprehensive integration plan that begins before the advisor’s official start date to ensure seamless integration and onboarding. This plan should address key elements such as office space, investment strategies, human resources, technology infrastructure, marketing efforts, licensing and other crucial aspects that should not be rushed. If an accelerated timeline is necessary, it’s important to understand there may be challenges to the onboarding process.

It’s important to understand that the transition of assets can take anywhere from four to 12 weeks after advisors move their licenses. No matter how much pre-transition training you provide, revisiting training for software, customer service protocols and the firm’s philosophy when they are on board can be very helpful because it’s easy to forget during the asset transfer phase. Continuous support helps them acclimate more effectively.

One of the most significant pitfalls is the lack of tenured administrative support. It’s crucial for the firm to realistically assess and provide the necessary administrative support during the transition and offer solutions in cases when there is not enough staff to move assets. Offering alternative solutions, whether temporary or permanent, to assist with asset transition is essential to prevent stress and ensure a successful relationship.

Rather than making generic claims about greatness, firms should clearly articulate their strengths and the specific type of advisors they support. A firm should state, “We support advisors who focus on A, B and C,” and be transparent about the areas they do not support. This clarity ensures advisors understand the firm’s capabilities and align their expectations. There is a firm for everyone, and we may not always be the right match. When advisors are aware of the firm’s specific strengths and focus areas, it becomes easier to meet and exceed their expectations post-transition.

Lili Kaufmann, Head of Transitions, Sanctuary Wealth
About 60 to 90 days after transition is the real adjustment period for financial advisors. It’s during this time that a majority of assets have moved, and newly independent advisors’ work may include tasks they’ve never done before, like dealing with issues that come with being the employer, rather than the employee.

I always tell transitioning advisors that going independent is like jumping off a cliff. Working with a partner that can help make that landing softer is essential. We believe our approach at Sanctuary, developed through the completion of over 85 transitions ranging from $200 million to several billion in client assets, can serve as an example for others. We maintain a team with the knowledge and experience to support new partner firms through almost anything they will encounter. We also strive to ensure the process is as straightforward as possible, so that advisor-owners of our new partner firms can succeed from the start.