How one breakaway RIA brought over more assets than it expected

Not all of our old clients came with us. But the overwhelming majority came and — because of their enthusiasm for our move — some asked us to oversee even more of their assets, while others pointed brand-new business our way.

Back in February, my colleagues and I launched a new registered investment adviser. It was an eventful spring, but one task linked to the move, the transition of our clients’ assets, went better than we could have imagined.

Thanks to new-client referrals from transitioning clients, and the fact that some clients entrusted even more of their money to us, our conversion rate for fee-based assets was better than 100%.

On average, breakaway advisers target 82% of their former clients, and actually persuade 78%, according to Fidelity Investments. While some of this spread is intentional — transitions let advisers zero in on preferred clients — it’s also true that some advisers fail to persuade good clients to make the move.

To be clear, not all of our old clients came with us. Some we thought best served where they were. But the overwhelming majority came and — because of their enthusiasm for our move — some asked us to oversee even more of their assets, while others pointed brand-new business our way.

WHAT WENT SO RIGHT FOR US?

About two years ago my teammates and I, then at a national brokerage, set out to understand how we could do more for our clients. After our research, we decided we could indeed do more for our clients as fiduciaries based in our own independent RIA — which we hoped would trigger organic growth over time through client referrals.

But we had some worries going in:
• Would our clients even want to follow us?
• Would we suffer in terms of credibility and stature under our own branding?
• Would the very act of “re-papering” a substantial book of business cause disruptions in our day-to-day work, and make clients even more hesitant to follow us?

In addition, we were new to all this. Two senior members of the team had been through transitions decades ago. For the rest of us, however, transitioning a book of business was a new endeavor.

Fortunately, we had an experienced coach in Dynasty Financial Partners, which has been conducting high-profile breakaway transitions since 2010.

In our transition outreach to clients, a long-standing policy in our group also came in handy. We’ve always made sure clients know multiple team members, so we can put more talent to work on their behalf and because it creates an atmosphere that’s at once productive, inclusive and calibrated to deliver state-of-the-art customer service. As you can imagine, this approach served us well in our first efforts as an independent firm.

Then, as I mentioned, almost all of our clients embraced our move.

POSITIVITY, PAPERWORK AND FAMILY REFERRALS

I think too that after the isolation of the pandemic, our whole team found it refreshing and fun to be working almost side-by-side again. Personally, I can’t remember feeling more enthusiastic, excited and invigorated at work. And of course positivity is infectious, making our interactions with clients that much easier, and giving a real lift to our efforts to market our new business and brand.

In looking to bring clients with us, it also helped that we could leverage new technologies, and discuss new investment and partnership opportunities. Internally, meanwhile, we relied on insights from our transition conversations to sharpen our knowledge of service niches and help tailor our marketing.

It wasn’t all sunshine and roses, however.

Although we believe our transition to independence benefits our clients — in terms of both customizability and higher standards of care — it can be a tough concept to explain, and even harder to understand. Some clients couldn’t initially see past the fact we were making a risky and apparently lateral move, and asking them to process whole packets of forms and notices, much of it in fine print. There’s no better way to test the strength of a relationship than to ask someone to sign a bunch of forms.

Getting some of these clients took time — but not always in an active sense. Many of our waverers opted to join us after they’d done some reading and thinking on their own. People process ideas differently. You have to be patient with them, and trust that in time, your message will resonate with most.

In contrast, our transition efforts garnered several more or less immediate referrals. One client immediately grasped what we were doing. He told us he thought the fact we were now an independent RIA aligned his interests with ours “more than ever.”

At the end of the call he said, “Now that you’re doing this, I’ll put you in touch with my brother. He’ll be very interested.”

And it turns out his brother was very interested.

[More: Breaking away from a brokerage during a pandemic is hard … but rewarding]

Matthew Liebman is co-founder and CEO of Amplius Wealth Advisors in Blue Bell, Pennsylvania.