How To Go Independent

An objective source to learn about independent business models

Will My Clients Come With Me?

TransitionsSean KernanComment

One of the biggest questions advisors have when they contemplate going independent is, "Will my clients come with me?"


Of course, there are a number of factors that will affect client retention in a move to an independent practice. It's important to know what these factors are so you can evaluate and make changes before your move so your clients transition with you.

Do Your Clients Like Working With You?

How your clients feel about working with you right now will play a large part in whether or not they go with you when you make the move to an independent firm. Do you have personal connections with each of your clients? Are they satisfied with the services you've provided to them? If so, they're more likely to make the move with you.

Do Your Clients Trust You?

Another big factor in whether or not clients will move with you is the amount of trust they have in your ability to serve as their financial advisor. Trust is at the foundation of what we do, so hopefully this factor doesn't come as a surprise.

Think about it from the client's perspective, though. You're probably asking them to move away from a big company (a trusted name) in favor of putting their full faith and confidence in you.  You are asking them to "vote" with their signature on transfer paperwork.  Most of your best clients will vote YES without hesitation.  However, if there are any unresolved doubts in their mind about you, this is where they may manifest themselves--either with hesitation or a flat out NO vote.

Did Your Client "Buy" You or the Firm?

When your clients first hired you, did they hire you because of the firm you work for, or did they hire you because they genuinely wanted to work with you?

If you're new to the business, you might have leveraged your firm's credibility to your advantage when getting clients. Many of us have done that when starting out in lieu of having years of experience.

If you did too good of a job selling your client on the benefits of the company rather than what you personally could provide for them, you might have to re-explain how much of their experience is due to the firm and how much is due to you and your team.  If necessary, take additional time in the preparation phase to reiterate how your particular process or approach really makes the difference---not the logo of a big firm on your business card.

How Long Have You Worked With Your Clients?

The tenure of a relationship is another key factor in whether or not clients will continue working with you. The longer you've worked with them, the more likely they'll be to follow you.

Consider an example: if you were friends with someone from Kindergarten through college, and then one of you moved away, you'd probably continue to talk. However, you'd probably lose contact with someone you only spent six months with. It's the same concept with your clients.

Additionally, how you met your clients plays a role in how likely they are to come with you. In my experience, if they were referred to you by an existing, satisfied client, they have a greater chance of continuing their relationship with you. If they were a walk-in, inherited from a former advisor, or just fell into your lap, there's not a strong enough connection there.

Here is an illustration of how that might play out.  If an advisor has been working in bank programs:  clients referred by existing clients (or family, friends, centers of influence), irrespective of the bank, will gernally be more willing to follow than clients referred by bank employees.

Are There Any Open Service Issues?

The factors mentioned above can't really be changed in the present. You've already met your clients and have been working with them. Let's talk about the factors you can address ahead of time while you're preparing for your move.

Have there been any recent service problems at your firm? If the back office is complicating things, make your clients aware the issues they've been experiencing are out of your control. Be as transparent as you can be with them and keep them in the loop. They'll appreciate that you care and it can strengthen your relationship with them.

You can't expect your clients to know the inner workings of your firm. If you go to a restaurant and the food isn't up to par, you're probably going to complain to the waiter, not the chef, even if they had nothing to do with how your food was prepared. They're the ones giving you the service and they're easily accessible. Do what you can for your clients to smooth things over.

How Many Services Do You Perform For Clients?

The more involved you are in a client's life, the more they depend on you. If you're helping them with investing, insurance, retirement planning, and cash management, that makes you somewhat indispensable.  

If your business model has always involved holistic financial planning, it should be obvious to them that they need you to continue that work with them.  Replacing someone to assist with only their investments or only their life insurance would not seem as overwhelming.

Will It Be a Headache For Your Clients to Move?

Regardless of how much your clients like you, there may be external factors that affect their decision to stay or go. If they have collateralized accounts, or investment assets with your firm that will be difficult to move, they might elect to stay. Perhaps a family member of theirs works for the firm, or they have another relationship keeping them there. They're going to focus on what gives them the most benefit.

You might be able to work around some of these factors, but clients will do what's practical for them.  The best approach here is to offer constant and enthusiastic (but realistic) assurance that you will work hard to make the process as smooth as possible.

Do You Have New Business in the Pipeline?

Knowing how to handle new referrals or clients in the midst of transitioning from a firm to being independent can be tough. You don't want to turn away clients, especially when starting on your own.

If it's an option, try delaying your first appointment with them. If there's nothing urgent to discuss, meet after you've transitioned. It's much easier to set a client up with your new firm than to transfer their assets and information over.

I ran into this situation when I went through my first move.  I received an inbound inquiry that was based on this family's positive exposure to the firm I was leaving.  Unfortunately, I was only a few weeks away from changing firms. I scheduled the appointment for a time after my scheduled move date.  

After I changed firms, but in advance of our scheduled meeting, I introduced myself to them in-person.  I apologized for the change of plans and asked for an opportunity to meet to discuss their situation.  We've now been working together for over 10 years.

This won't always happen, but you should do your best to explain the situation and the options they have given the circumstances.  I know that in this case, the prospective clients appreciated that I took the time to deliver the news in person--and later said they probably would have otherwise just found another person at the old firm.

Are You Confident About Going Independent?

When communicating to clients that you plan on going independent, you should do it in a way that conveys enthusiasm and confidence. Put yourself in their shoes. Depending on their temperament, you may have just thrown them for a loop. They may not understand why you didn't tell them about your plans sooner, or why it doesn't seem more orderly. Being confident and passionate about your decision can help put them at ease.

It's Okay If You Don't Get 100% Client Retention

If you’re focusing on a different niche when going independent, certain clients may no longer be a good fit for your business. You may find that with time, your financial planning philosophy has changed, or your investment approach has evolved.

At the end of the day, it's okay if not every single client comes with you. It might not make sense for some folks to move, and you might not want every single account to transfer, either.

If you're focusing on a different niche when going independent, certain clients may no longer be a good fit for your business. You may find that with time, your financial planning philosophy has changed, or your investment approach has evolved.

The nice thing about going independent is the flexibility it offers. You can have a smaller practice, be more profitable, and enjoy working with all of your clients.  One great byproduct of this process:  you start over with clients who have made a recent, proactive decision to work with you.  You can have a renewed confidence that your clients truly value your relationship.

How to Take Action

Now you know the factors that determine the likelihood of your clients making the transition with you. How can you use this knowledge to your advantage?

I recommend making a list of the clients you want to continue working with. Make notes about the source of the relationship, how long you've been working together, and a guesstimate of the odds of them moving with you.

By doing this, you'll be able to see the weighted asset estimate of what your assets under management might be at your new place. You should also begin to recognize the weaknesses you have with certain clients. If you're months away from making the move, try to work to strengthen those areas if you can.

When you announce the news, you might be surprised by the choices a few clients make.  But if you've been in the industry for a while, you'll have a good sense of who will come with you and who won't. Try not to take those surprise "no thanks" responses personally.  

You can explain the benefits to each client in detail, but ultimately they will have make their own decision.  After a reasonable time to allow for all to decide, move forward with those people that have placed their full faith and confidence in you.  You owe it to them to develop your own practice to serve them well now and in the future.