The truth about transitions: You <i>can</i> take it with you

Brokers considering a transition to the registered investment advisory (RIA) model often are anxious about the willingness of their clients to go along with the move. Whether starting their own business or joining an existing RIA firm, brokers wonder how many of their clients will join them.

A new InvestmentNews study of adviser transitions sponsored by TD Ameritrade Institutional finds that these worries are largely unnecessary as outlined in a previous article “The truth about transitions: The grass is greener.”

https://www.investmentnews.com/wp-content/uploads/assets/graphics src=”/wp-content/uploads2016/11/CI107711113.JPEG”

Among brokers who shifted to the RIA channel, an 82% of client assets targeted for retention made the move with the adviser, and 58% of all client assets came along. Importantly, 83% of brokers said they intentionally left some clients and their assets behind when moving, using the transition as an opportunity to upgrade the quality of their business and focus only on those clients with whom they wished to continue a relationship.

Half of these brokers saw client assets flow to them within the first three months after a transition. An additional 34% of brokers saw assets transfer within six months and additional 8% after eight months. The remainder reported retained assets took nine ore more months to transition to their new firms.

Of course, some assets and clients didn’t move with the broker. The survey found that brokers attributed this reluctance to move to various reasons, ranging from clients wishing to stay with a different broker at the old firm, to clients owning proprietary products sold by the old firm.

Many brokers also selected the choice of “other” when asked to explain the reason clients declined to move. Given the range of clients brokers serve, it’s understandable for there to be many motives for any particular client reaction. That’s why being able to stay close to clients and address whatever may be on their minds is so important during a transition, and why having the support of an experienced transition team can help a broker devote time to those critical communication efforts.
“In our experience, clients are overwhelmingly in favor of their broker moving to an environment where there is a clear fiduciary standard in all dealings and where costs and fees are transparent,” said Scott Collins, Director of Brokerage Independence at TD Ameritrade Institutional. “Many brokers who make the move to independence are often pleasantly surprised by the depth of support they get from their clients and wonder why they didn’t make the jump sooner.”

Overall, as a result of client retention as well as new business-building efforts, brokers who moved to the RIA channel experienced an increase in revenue (45%), an increase in the number of clients (36%) and growth in overall assets (36%).

Which goes to show you that when it comes to going independent, you really can take it with you.

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.