A wirehouse team amidst a breakaway transition requires a fast learning curve in a short period of time during which the entire advisory team-turned-RIA needs to run full speed ahead.  This period of conversion is defined by a lot of pressure and a lot of moving parts.  Here at PFI Advisors, we constantly look for any and all processes that can reduce or eliminate tension on the advisor’s part.  This usually comes down to over-communication, not only with clients, but among the team itself.  That communication stems from proper and accurate tracking of client paperwork during the first few months of the advisor’s transition to independence.

After an advisor and any additional staff resign from their former firm, there is much going on at once.  Most importantly, clients need to be notified of the advisor’s very recent departure and newly-launched RIA*.  After quickly explaining why the advisor has decided to depart from their former employer and start their own firm, they will need to communicate the process that will involve transitioning client assets – the first step being the preparation of client paperwork.

As to be expected, the advisor will be very anxious to get all documents to clients in the timeliest manner, encouraging the team to get everything out the door as quickly as possible.  What is often overlooked in this process is just how long it may take for the client to return that account application paperwork to the advisor.  Clients may have prior obligations to attend to.  They may need to reach out to their business managers or accountants for information they don’t have handy.  They may have to find family members or other signing parties that are not immediately available.  While the process has been made as simple as possible, the advisor is still at the mercy of their clients with respect to how fast the paperwork can be returned to the RIA for processing.

When client paperwork arrives back in the office, the new RIA will need to review the paperwork to ensure all forms have been completed and to verify the accuracy of all information (this is where the real excitement starts!).  Once it has been quality checked by the RIA’s operations staff, the custodian will review everything for their own due diligence before accounts can be opened and assets transferred.  Paperwork may be returned to the team for additional information/verification but will ultimately be submitted for processing.

Once this happens, advisors are antsy to know how quickly assets will transition from their former firm to their new custodian.  They often do not consider the type of account that was submitted, or the length of time certain accounts can take to transfer.  Accounts that are collateralizing a loan, for example, will not be released from the former firm until the associated loan account has been paid off and closed.  Certain positions/asset classes may be held or may take longer to process at the former firm.  Depending on the complexity, it may take days – even weeks – to process a single account, let alone an entire household.

Throughout the client and asset transition, it is up to the RIA’s operations staff to diligently track when paperwork was sent out to clients, when it was received back in the office, and what the status of that paperwork is.  Every day during the transition, advisors will be calling into the office as they travel from one client meeting to the next and ask for the status of clients’ account transfers.  Advisors will be concerned with the time it takes to transition everything as they are not involved in the minutia of paperwork processing or the correspondence with clients for additional information that may have been missing.  Much of this stress can be reduced by an operations staff that can pinpoint exactly where in the transition process each account within a particular household currently resides.

One way to track the progress and status of client paperwork is via an outlined project plan in an Excel file, Smartsheet (or similar shared project management workspace), or through a CRM.  The operations team should be able to glance at their tracking spreadsheet and respond to the advisor with the current status of the account.

Most advisors incorrectly think that signed client documents are enough to submit paperwork to the custodian for processing, which would trigger the assets to begin the account opening and transfer process.  They don’t realize the numerous legitimate reasons for transfers to be delayed.  For example, clients typically do not have tax identification numbers for all entities or social security numbers for all signors readily available for all accounts within a complicated household.  Additionally, they may not know the full legal names or dates of incorporation for trust and business entity accounts.  The operations team can work with the client to track this information down while keeping the advisor abreast of all progress.  They can explain to the advisor that just because a particular household or account takes more time than anticipated to transition doesn’t mean something is necessarily wrong or has gone awry.  Helping advisors understand this will reduce their stress level during the transition and keep all team members focused on everyone’s end goal of transitioning as many assets in as short amount of time as possible.

The operations staff should leverage the expertise of custodians and other transition consultants to create a template of relevant information required on various applications and forms as this will help expedite the process of quality checking each client account application and feature form.  An RIA’s transition success can be measured by how quickly the operations team can ensure received client paperwork has all the required information and submit that paperwork to the custodian for processing.  Once completed paperwork is submitted, it typically takes five to seven business days for the transfer to complete.  When an advisor asks for a status update on a particular client’s transition, their operations team can reference the turnaround time from receiving unreviewed client paperwork to when it is handed off in good order to the custodian for processing.

If an RIA educates themselves and develops a strategic plan for tracking and processing the associated client paperwork, this daunting feat becomes much more manageable.  By leveraging the partnered custodian’s expertise and other experienced industry professionals, an RIA gains access to efficiency and ease at a time that may be otherwise described as chaotic.  RIAs should have confidence that this process works and will be able to appropriately manage expectations.  With proper planning ahead of time, and diligent tracking during the transition, the unavoidable angst that accompanies any major career change can, and should, be drastically reduced.  This inevitably leads the advisors and their operations team to breathe a huge sigh of relief and enables them to thrive in the freedom of the independent space.

* Assuming the advisor is not violating their employment agreement and is part of the Broker Protocol.


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