The truth about transitions: With the right help, independence doesn’t have to be difficult for brokers

With brokers facing unprecedented regulatory change, many are seeking new affiliations and different approaches for serving investors. Results from the just-released InvestmentNews study sponsored by TD Ameritrade Institutional shows that brokers who have made a transition to become a registered investment adviser typically debunk three oft-repeated myths that have discouraged many brokers from going independent.

We learned the grass often really is greener when brokers transition to the RIA model, as personal and business satisfaction rise, and we saw that you can take it with you, as the majority of brokers moving to the RIA channel enjoy surprisingly high rates of client and asset retention.

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Our survey, though, also shows that brokers still have to concern themselves with all aspects of a transition. Even so, being informed, prepared and supported by an experienced transition-support team can make the move considerably less stressful.

“Based on years of helping hundreds of brokers make successful transitions, it is essential that they are thoroughly informed about what has to be done and work with an experienced transition team that guides and supports them through a fully documented, step-by-step process,” said Scott Collins, Director of Brokerage Independence at TD Ameritrade Institutional.
There’s no getting around the fact that brokers considering a move to a new firm or to a new affiliation worry about the transition process. In the recent InvestmentNews/TD Ameritrade Institutional study of adviser transitions, the four biggest challenges brokers citing when considering a change in their affiliation were legal requirements (37%), the process of transitioning clients (33%), the paperwork involved in the transition (31%), and the logistics surrounding the move (13%).

Clearly, the uncertainty of a change weighs on brokers’ minds. Yet brokers who go through a transition to the RIA channel report that they retain 85% of the assets they targeted to retain, and 82% said they were either very satisfied (67%) or satisfied (15%) after making the move. What’s more, 76% report an improved lifestyle, 64% report higher income, 52% overall growth in revenue, and 48% an increase in clients.

So, how did these brokers, now much happier, get over the transition hurdle that looms as a barrier for others? It’s a matter of getting informed and being prepared.

Not knowing the actual transition steps or the appropriate sequence of tasks in the process can lead to delays as well as frustration for the adviser and their clients, Collins said. And since they will be tackling issues and taking on new responsibilities that their previous employer handled, it’s understandable for brokers not be aware of the scope of what has to be done or how to manage the transition.

“For those and other reasons, it’s important that brokers moving to the RIA model make sure there is a dedicated transition team to assist and guide them at their intended custodian,” Collins added. “It’s also important that they ask how long the team will be available to help, what specific help the team will provide and whether other brokers can be contacted for additional insights.”

So while any transition will involve details that an adviser must attend do, being informed and prepared about those details — and having a qualified team of experts to help — is the best way to reduce the anxiety that comes with a change.

TD Ameritrade and Investment News are separate and unaffiliated and each is not responsible for the other’s content. Brokerage services provided by TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. All rights reserved. Used with permission.